Correlation Between Cisco Systems and Direxion Shares
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Direxion Shares 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 Direxion Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Direxion Shares ETF, you can compare the effects of market volatilities on Cisco Systems and Direxion Shares 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 Direxion Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Direxion Shares.
Diversification Opportunities for Cisco Systems and Direxion Shares
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cisco and Direxion is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Direxion Shares ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Shares ETF 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 Direxion Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Shares ETF has no effect on the direction of Cisco Systems i.e., Cisco Systems and Direxion Shares go up and down completely randomly.
Pair Corralation between Cisco Systems and Direxion Shares
Given the investment horizon of 90 days Cisco Systems is expected to generate 0.43 times more return on investment than Direxion Shares. However, Cisco Systems is 2.32 times less risky than Direxion Shares. It trades about 0.18 of its potential returns per unit of risk. Direxion Shares ETF is currently generating about -0.16 per unit of risk. If you would invest 5,920 in Cisco Systems on November 9, 2024 and sell it today you would earn a total of 307.00 from holding Cisco Systems or generate 5.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cisco Systems vs. Direxion Shares ETF
Performance |
| Timeline |
| Cisco Systems |
| Direxion Shares ETF |
Cisco Systems and Direxion Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Direxion Shares
The main advantage of trading using opposite Cisco Systems and Direxion Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Direxion Shares 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 Direxion Shares will offset losses from the drop in Direxion Shares' long position.| Cisco Systems vs. Nokia Corp ADR | Cisco Systems vs. Extreme Networks | Cisco Systems vs. Clearfield | Cisco Systems vs. Great Western Minerals |
| Direxion Shares vs. Freedom Day Dividend | Direxion Shares vs. Franklin Templeton ETF | Direxion Shares vs. iShares MSCI China | Direxion Shares vs. Tidal Trust II |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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