Correlation Between Cisco Systems and Global X
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Global X 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 Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Global X MSCI, you can compare the effects of market volatilities on Cisco Systems and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Global X.
Diversification Opportunities for Cisco Systems and Global X
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cisco and Global is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Global X MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X MSCI 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X MSCI has no effect on the direction of Cisco Systems i.e., Cisco Systems and Global X go up and down completely randomly.
Pair Corralation between Cisco Systems and Global X
Given the investment horizon of 90 days Cisco Systems is expected to generate 2.94 times less return on investment than Global X. But when comparing it to its historical volatility, Cisco Systems is 1.45 times less risky than Global X. It trades about 0.06 of its potential returns per unit of risk. Global X MSCI is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,230 in Global X MSCI on September 1, 2024 and sell it today you would earn a total of 4,122 from holding Global X MSCI or generate 97.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Cisco Systems vs. Global X MSCI
Performance |
| Timeline |
| Cisco Systems |
| Global X MSCI |
Cisco Systems and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Global X
The main advantage of trading using opposite Cisco Systems and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| Cisco Systems vs. Comtech Telecommunications Corp | Cisco Systems vs. NETGEAR | Cisco Systems vs. KVH Industries | Cisco Systems vs. Silicom |
| Global X vs. Global X MSCI | Global X vs. iShares MSCI Peru | Global X vs. iShares MSCI Chile | Global X vs. Global X MSCI |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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