Correlation Between Cisco Systems and Avanti Energy
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Avanti Energy 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 Avanti Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Avanti Energy, you can compare the effects of market volatilities on Cisco Systems and Avanti Energy 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 Avanti Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Avanti Energy.
Diversification Opportunities for Cisco Systems and Avanti Energy
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cisco and Avanti is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Avanti Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanti Energy 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 Avanti Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanti Energy has no effect on the direction of Cisco Systems i.e., Cisco Systems and Avanti Energy go up and down completely randomly.
Pair Corralation between Cisco Systems and Avanti Energy
Given the investment horizon of 90 days Cisco Systems is expected to generate 0.18 times more return on investment than Avanti Energy. However, Cisco Systems is 5.63 times less risky than Avanti Energy. It trades about 0.36 of its potential returns per unit of risk. Avanti Energy is currently generating about -0.09 per unit of risk. If you would invest 5,477 in Cisco Systems on September 1, 2024 and sell it today you would earn a total of 444.00 from holding Cisco Systems or generate 8.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cisco Systems vs. Avanti Energy
Performance |
| Timeline |
| Cisco Systems |
| Avanti Energy |
Cisco Systems and Avanti Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Avanti Energy
The main advantage of trading using opposite Cisco Systems and Avanti Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Avanti Energy 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 Avanti Energy will offset losses from the drop in Avanti Energy's long position.| Cisco Systems vs. Comtech Telecommunications Corp | Cisco Systems vs. KVH Industries | Cisco Systems vs. Silicom | Cisco Systems vs. Knowles Cor |
| Avanti Energy vs. Desert Mountain Energy | Avanti Energy vs. Avanti Energy | Avanti Energy vs. Royal Helium | Avanti Energy vs. Total Helium |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |