Correlation Between Cisco Systems and Bouygues
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Bouygues 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 Bouygues into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Bouygues SA, you can compare the effects of market volatilities on Cisco Systems and Bouygues 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 Bouygues. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Bouygues.
Diversification Opportunities for Cisco Systems and Bouygues
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cisco and Bouygues is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Bouygues SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouygues SA 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 Bouygues. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bouygues SA has no effect on the direction of Cisco Systems i.e., Cisco Systems and Bouygues go up and down completely randomly.
Pair Corralation between Cisco Systems and Bouygues
Given the investment horizon of 90 days Cisco Systems is expected to generate 0.58 times more return on investment than Bouygues. However, Cisco Systems is 1.73 times less risky than Bouygues. It trades about 0.09 of its potential returns per unit of risk. Bouygues SA is currently generating about -0.05 per unit of risk. If you would invest 4,674 in Cisco Systems on September 2, 2024 and sell it today you would earn a total of 1,247 from holding Cisco Systems or generate 26.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 72.58% |
| Values | Daily Returns |
Cisco Systems vs. Bouygues SA
Performance |
| Timeline |
| Cisco Systems |
| Bouygues SA |
Cisco Systems and Bouygues Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Bouygues
The main advantage of trading using opposite Cisco Systems and Bouygues positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Bouygues 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 Bouygues will offset losses from the drop in Bouygues' long position.| Cisco Systems vs. Juniper Networks | Cisco Systems vs. Nokia Corp ADR | Cisco Systems vs. Motorola Solutions | Cisco Systems vs. Ciena Corp |
| Bouygues vs. Orion Group Holdings | Bouygues vs. Agrify Corp | Bouygues vs. Matrix Service Co | Bouygues vs. MYR Group |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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