Correlation Between Cisco Systems and Canacol Energy
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Canacol 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 Canacol 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 Canacol Energy, you can compare the effects of market volatilities on Cisco Systems and Canacol 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 Canacol Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Canacol Energy.
Diversification Opportunities for Cisco Systems and Canacol Energy
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cisco and Canacol is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Canacol Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canacol 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 Canacol Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canacol Energy has no effect on the direction of Cisco Systems i.e., Cisco Systems and Canacol Energy go up and down completely randomly.
Pair Corralation between Cisco Systems and Canacol Energy
Given the investment horizon of 90 days Cisco Systems is expected to generate 4.23 times less return on investment than Canacol Energy. But when comparing it to its historical volatility, Cisco Systems is 4.22 times less risky than Canacol Energy. It trades about 0.27 of its potential returns per unit of risk. Canacol Energy is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 210.00 in Canacol Energy on August 31, 2024 and sell it today you would earn a total of 61.00 from holding Canacol Energy or generate 29.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cisco Systems vs. Canacol Energy
Performance |
| Timeline |
| Cisco Systems |
| Canacol Energy |
Cisco Systems and Canacol Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Canacol Energy
The main advantage of trading using opposite Cisco Systems and Canacol Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Canacol 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 Canacol Energy will offset losses from the drop in Canacol Energy's long position.| Cisco Systems vs. Juniper Networks | Cisco Systems vs. Nokia Corp ADR | Cisco Systems vs. Motorola Solutions | Cisco Systems vs. Ciena Corp |
| Canacol Energy vs. PetroShale | Canacol Energy vs. Inpex Corp ADR | Canacol Energy vs. Battalion Oil Corp | Canacol Energy vs. Condor Petroleum |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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