Correlation Between Cisco Systems and Horizon Active
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Horizon Active 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 Horizon Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Horizon Active Risk, you can compare the effects of market volatilities on Cisco Systems and Horizon Active 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 Horizon Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Horizon Active.
Diversification Opportunities for Cisco Systems and Horizon Active
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cisco and Horizon is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Horizon Active Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Active Risk 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 Horizon Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Active Risk has no effect on the direction of Cisco Systems i.e., Cisco Systems and Horizon Active go up and down completely randomly.
Pair Corralation between Cisco Systems and Horizon Active
Given the investment horizon of 90 days Cisco Systems is expected to generate 1.6 times more return on investment than Horizon Active. However, Cisco Systems is 1.6 times more volatile than Horizon Active Risk. It trades about 0.27 of its potential returns per unit of risk. Horizon Active Risk is currently generating about 0.07 per unit of risk. If you would invest 5,528 in Cisco Systems on August 28, 2024 and sell it today you would earn a total of 346.00 from holding Cisco Systems or generate 6.26% 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. Horizon Active Risk
Performance |
| Timeline |
| Cisco Systems |
| Horizon Active Risk |
Cisco Systems and Horizon Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Horizon Active
The main advantage of trading using opposite Cisco Systems and Horizon Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Horizon Active 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 Horizon Active will offset losses from the drop in Horizon Active's long position.| Cisco Systems vs. Ichor Holdings | Cisco Systems vs. Fabrinet | Cisco Systems vs. Hello Group | Cisco Systems vs. Ultra Clean Holdings |
| Horizon Active vs. Horizon Active Asset | Horizon Active vs. Horizon Active Dividend | Horizon Active vs. Horizon Defined Risk | Horizon Active vs. Horizon Defensive Equity |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |