Correlation Between Cisco Systems and ITALIAN WINE
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and ITALIAN WINE 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 Cisco Systems and ITALIAN WINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and ITALIAN WINE BRANDS, you can compare the effects of market volatilities on Cisco Systems and ITALIAN WINE 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 Cisco Systems with a short position of ITALIAN WINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and ITALIAN WINE.
Diversification Opportunities for Cisco Systems and ITALIAN WINE
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cisco and ITALIAN is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and ITALIAN WINE BRANDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITALIAN WINE BRANDS and Cisco Systems 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 Cisco Systems are associated (or correlated) with ITALIAN WINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITALIAN WINE BRANDS has no effect on the direction of Cisco Systems i.e., Cisco Systems and ITALIAN WINE go up and down completely randomly.
Pair Corralation between Cisco Systems and ITALIAN WINE
Assuming the 90 days horizon Cisco Systems is expected to generate 0.94 times more return on investment than ITALIAN WINE. However, Cisco Systems is 1.06 times less risky than ITALIAN WINE. It trades about 0.34 of its potential returns per unit of risk. ITALIAN WINE BRANDS is currently generating about 0.05 per unit of risk. If you would invest 5,000 in Cisco Systems on September 1, 2024 and sell it today you would earn a total of 585.00 from holding Cisco Systems or generate 11.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cisco Systems vs. ITALIAN WINE BRANDS
Performance |
| Timeline |
| Cisco Systems |
| ITALIAN WINE BRANDS |
Cisco Systems and ITALIAN WINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and ITALIAN WINE
The main advantage of trading using opposite Cisco Systems and ITALIAN WINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, ITALIAN WINE 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 ITALIAN WINE will offset losses from the drop in ITALIAN WINE's long position.| Cisco Systems vs. Playtech plc | Cisco Systems vs. Electronic Arts | Cisco Systems vs. ANTA SPORTS PRODUCT | Cisco Systems vs. USWE SPORTS AB |
| ITALIAN WINE vs. RETAIL FOOD GROUP | ITALIAN WINE vs. Pick n Pay | ITALIAN WINE vs. The Trade Desk | ITALIAN WINE vs. FLOW TRADERS 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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