Correlation Between Cisco Systems and CCFNB Bancorp
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and CCFNB Bancorp 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 CCFNB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and CCFNB Bancorp, you can compare the effects of market volatilities on Cisco Systems and CCFNB Bancorp 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 CCFNB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and CCFNB Bancorp.
Diversification Opportunities for Cisco Systems and CCFNB Bancorp
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cisco and CCFNB is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and CCFNB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCFNB Bancorp 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 CCFNB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCFNB Bancorp has no effect on the direction of Cisco Systems i.e., Cisco Systems and CCFNB Bancorp go up and down completely randomly.
Pair Corralation between Cisco Systems and CCFNB Bancorp
Given the investment horizon of 90 days Cisco Systems is expected to generate 1.04 times less return on investment than CCFNB Bancorp. But when comparing it to its historical volatility, Cisco Systems is 1.82 times less risky than CCFNB Bancorp. It trades about 0.19 of its potential returns per unit of risk. CCFNB Bancorp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,475 in CCFNB Bancorp on October 26, 2024 and sell it today you would earn a total of 1,025 from holding CCFNB Bancorp or generate 29.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Cisco Systems vs. CCFNB Bancorp
Performance |
| Timeline |
| Cisco Systems |
| CCFNB Bancorp |
Cisco Systems and CCFNB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and CCFNB Bancorp
The main advantage of trading using opposite Cisco Systems and CCFNB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, CCFNB Bancorp 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 CCFNB Bancorp will offset losses from the drop in CCFNB Bancorp's long position.| Cisco Systems vs. Comtech Telecommunications Corp | Cisco Systems vs. NETGEAR | Cisco Systems vs. KVH Industries | Cisco Systems vs. Silicom |
| CCFNB Bancorp vs. Susquehanna Community Financial | CCFNB Bancorp vs. Mifflinburg Bancorp | CCFNB Bancorp vs. Woodlands Financial Services | CCFNB Bancorp vs. Penns Woods Bancorp |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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