Correlation Between Cisco Systems and Amex Exploration
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Amex Exploration 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 Amex Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Amex Exploration, you can compare the effects of market volatilities on Cisco Systems and Amex Exploration 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 Amex Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Amex Exploration.
Diversification Opportunities for Cisco Systems and Amex Exploration
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cisco and Amex is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Amex Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amex Exploration 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 Amex Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amex Exploration has no effect on the direction of Cisco Systems i.e., Cisco Systems and Amex Exploration go up and down completely randomly.
Pair Corralation between Cisco Systems and Amex Exploration
Given the investment horizon of 90 days Cisco Systems is expected to generate 0.31 times more return on investment than Amex Exploration. However, Cisco Systems is 3.21 times less risky than Amex Exploration. It trades about 0.05 of its potential returns per unit of risk. Amex Exploration is currently generating about 0.0 per unit of risk. If you would invest 4,633 in Cisco Systems on September 4, 2024 and sell it today you would earn a total of 1,310 from holding Cisco Systems or generate 28.28% 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. Amex Exploration
Performance |
| Timeline |
| Cisco Systems |
| Amex Exploration |
Cisco Systems and Amex Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Amex Exploration
The main advantage of trading using opposite Cisco Systems and Amex Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Amex Exploration 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 Amex Exploration will offset losses from the drop in Amex Exploration's long position.| Cisco Systems vs. Cambium Networks Corp | Cisco Systems vs. KVH Industries | Cisco Systems vs. Knowles Cor | Cisco Systems vs. Ituran Location and |
| Amex Exploration vs. Minnova Corp | Amex Exploration vs. Argo Gold | Amex Exploration vs. Advance Gold Corp | Amex Exploration vs. Blue Star Gold |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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