Correlation Between ADTRAN and Cisco Systems
Can any of the company-specific risk be diversified away by investing in both ADTRAN 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 ADTRAN and Cisco Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADTRAN Inc and Cisco Systems, you can compare the effects of market volatilities on ADTRAN 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 ADTRAN with a short position of Cisco Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADTRAN and Cisco Systems.
Diversification Opportunities for ADTRAN and Cisco Systems
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ADTRAN and Cisco is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding ADTRAN Inc and Cisco Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisco Systems and ADTRAN 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 ADTRAN Inc 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 ADTRAN i.e., ADTRAN and Cisco Systems go up and down completely randomly.
Pair Corralation between ADTRAN and Cisco Systems
Given the investment horizon of 90 days ADTRAN Inc is expected to under-perform the Cisco Systems. In addition to that, ADTRAN is 2.95 times more volatile than Cisco Systems. It trades about -0.02 of its total potential returns per unit of risk. Cisco Systems is currently generating about 0.05 per unit of volatility. If you would invest 4,462 in Cisco Systems on September 13, 2024 and sell it today you would earn a total of 1,470 from holding Cisco Systems or generate 32.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
ADTRAN Inc vs. Cisco Systems
Performance |
| Timeline |
| ADTRAN Inc |
| Cisco Systems |
ADTRAN and Cisco Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADTRAN and Cisco Systems
The main advantage of trading using opposite ADTRAN and Cisco Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADTRAN 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.| ADTRAN vs. Mynaric AG ADR | ADTRAN vs. KVH Industries | ADTRAN vs. Telesat Corp | ADTRAN vs. Digi International |
| Cisco Systems vs. Juniper Networks | Cisco Systems vs. Nokia Corp ADR | Cisco Systems vs. Motorola Solutions | Cisco Systems vs. Ciena Corp |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |