Correlation Between KAUFMAN ET and Cisco Systems
Can any of the company-specific risk be diversified away by investing in both KAUFMAN ET and Cisco Systems at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining KAUFMAN ET and Cisco Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAUFMAN ET BROAD and Cisco Systems, you can compare the effects of market volatilities on KAUFMAN ET and Cisco Systems and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in KAUFMAN ET with a short position of Cisco Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAUFMAN ET and Cisco Systems.
Diversification Opportunities for KAUFMAN ET and Cisco Systems
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KAUFMAN and Cisco is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding KAUFMAN ET BROAD and Cisco Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisco Systems and KAUFMAN ET is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on KAUFMAN ET BROAD are associated (or correlated) with Cisco Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cisco Systems has no effect on the direction of KAUFMAN ET i.e., KAUFMAN ET and Cisco Systems go up and down completely randomly.
Pair Corralation between KAUFMAN ET and Cisco Systems
Assuming the 90 days trading horizon KAUFMAN ET BROAD is expected to generate 0.96 times more return on investment than Cisco Systems. However, KAUFMAN ET BROAD is 1.04 times less risky than Cisco Systems. It trades about -0.05 of its potential returns per unit of risk. Cisco Systems is currently generating about -0.12 per unit of risk. If you would invest 3,195 in KAUFMAN ET BROAD on January 13, 2025 and sell it today you would lose (100.00) from holding KAUFMAN ET BROAD or give up 3.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KAUFMAN ET BROAD vs. Cisco Systems
Performance |
| Timeline |
| KAUFMAN ET BROAD |
| Cisco Systems |
KAUFMAN ET and Cisco Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAUFMAN ET and Cisco Systems
The main advantage of trading using opposite KAUFMAN ET and Cisco Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAUFMAN ET position performs unexpectedly, Cisco Systems can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cisco Systems will offset losses from the drop in Cisco Systems' long position.| KAUFMAN ET vs. SPECTRAL MEDICAL | KAUFMAN ET vs. Apollo Medical Holdings | KAUFMAN ET vs. Brockhaus Capital Management | KAUFMAN ET vs. AFFLUENT MEDICAL SAS |
| Cisco Systems vs. Hochschild Mining plc | Cisco Systems vs. Penn National Gaming | Cisco Systems vs. MOVIE GAMES SA | Cisco Systems vs. SHELF DRILLING LTD |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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