Correlation Between Cisco Systems and ProShares Trust
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and ProShares Trust 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 ProShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and ProShares Trust , you can compare the effects of market volatilities on Cisco Systems and ProShares Trust 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 ProShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and ProShares Trust.
Diversification Opportunities for Cisco Systems and ProShares Trust
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cisco and ProShares is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and ProShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Trust 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 ProShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Trust has no effect on the direction of Cisco Systems i.e., Cisco Systems and ProShares Trust go up and down completely randomly.
Pair Corralation between Cisco Systems and ProShares Trust
Given the investment horizon of 90 days Cisco Systems is expected to generate 0.36 times more return on investment than ProShares Trust. However, Cisco Systems is 2.8 times less risky than ProShares Trust. It trades about 0.05 of its potential returns per unit of risk. ProShares Trust is currently generating about -0.11 per unit of risk. If you would invest 4,566 in Cisco Systems on August 27, 2024 and sell it today you would earn a total of 1,289 from holding Cisco Systems or generate 28.23% 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. ProShares Trust
Performance |
| Timeline |
| Cisco Systems |
| ProShares Trust |
Cisco Systems and ProShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and ProShares Trust
The main advantage of trading using opposite Cisco Systems and ProShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, ProShares Trust 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 ProShares Trust will offset losses from the drop in ProShares Trust's long position.| Cisco Systems vs. Ichor Holdings | Cisco Systems vs. Fabrinet | Cisco Systems vs. Hello Group | Cisco Systems vs. Ultra Clean Holdings |
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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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