Correlation Between Cisco Systems and STRAX AB
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and STRAX AB 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 STRAX AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and STRAX AB SK, you can compare the effects of market volatilities on Cisco Systems and STRAX AB 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 STRAX AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and STRAX AB.
Diversification Opportunities for Cisco Systems and STRAX AB
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cisco and STRAX is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and STRAX AB SK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRAX AB SK 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 STRAX AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRAX AB SK has no effect on the direction of Cisco Systems i.e., Cisco Systems and STRAX AB go up and down completely randomly.
Pair Corralation between Cisco Systems and STRAX AB
Assuming the 90 days horizon Cisco Systems is expected to generate 0.14 times more return on investment than STRAX AB. However, Cisco Systems is 6.91 times less risky than STRAX AB. It trades about 0.39 of its potential returns per unit of risk. STRAX AB SK is currently generating about -0.27 per unit of risk. If you would invest 5,572 in Cisco Systems on October 22, 2024 and sell it today you would earn a total of 332.00 from holding Cisco Systems or generate 5.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cisco Systems vs. STRAX AB SK
Performance |
| Timeline |
| Cisco Systems |
| STRAX AB SK |
Cisco Systems and STRAX AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and STRAX AB
The main advantage of trading using opposite Cisco Systems and STRAX AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, STRAX AB 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 STRAX AB will offset losses from the drop in STRAX AB's long position.| Cisco Systems vs. CarsalesCom | Cisco Systems vs. Motorcar Parts of | Cisco Systems vs. WillScot Mobile Mini | Cisco Systems vs. SOCKET MOBILE NEW |
| STRAX AB vs. MINCO SILVER | STRAX AB vs. MCEWEN MINING INC | STRAX AB vs. De Grey Mining | STRAX AB vs. Japan Tobacco |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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