Correlation Between Cisco Systems and BrainChip Holdings
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and BrainChip Holdings 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 BrainChip Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and BrainChip Holdings, you can compare the effects of market volatilities on Cisco Systems and BrainChip Holdings 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 BrainChip Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and BrainChip Holdings.
Diversification Opportunities for Cisco Systems and BrainChip Holdings
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cisco and BrainChip is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and BrainChip Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BrainChip Holdings 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 BrainChip Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BrainChip Holdings has no effect on the direction of Cisco Systems i.e., Cisco Systems and BrainChip Holdings go up and down completely randomly.
Pair Corralation between Cisco Systems and BrainChip Holdings
Given the investment horizon of 90 days Cisco Systems is expected to generate 0.2 times more return on investment than BrainChip Holdings. However, Cisco Systems is 5.1 times less risky than BrainChip Holdings. It trades about 0.28 of its potential returns per unit of risk. BrainChip Holdings is currently generating about -0.02 per unit of risk. If you would invest 5,583 in Cisco Systems on September 3, 2024 and sell it today you would earn a total of 338.00 from holding Cisco Systems or generate 6.05% 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. BrainChip Holdings
Performance |
| Timeline |
| Cisco Systems |
| BrainChip Holdings |
Cisco Systems and BrainChip Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and BrainChip Holdings
The main advantage of trading using opposite Cisco Systems and BrainChip Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, BrainChip Holdings 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 BrainChip Holdings will offset losses from the drop in BrainChip Holdings' long position.| Cisco Systems vs. Highway Holdings Limited | Cisco Systems vs. QCR Holdings | Cisco Systems vs. Partner Communications | Cisco Systems vs. Acumen Pharmaceuticals |
| BrainChip Holdings vs. Skywater Technology | BrainChip Holdings vs. Everspin Technologies | BrainChip Holdings vs. 4DS Memory Limited | BrainChip Holdings vs. Weebit Nano Limited |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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