Correlation Between Cisco Systems and Edgio
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Edgio 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 Edgio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Edgio Inc, you can compare the effects of market volatilities on Cisco Systems and Edgio 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 Edgio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Edgio.
Diversification Opportunities for Cisco Systems and Edgio
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cisco and Edgio is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Edgio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgio Inc 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 Edgio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgio Inc has no effect on the direction of Cisco Systems i.e., Cisco Systems and Edgio go up and down completely randomly.
Pair Corralation between Cisco Systems and Edgio
If you would invest 5,870 in Cisco Systems on November 3, 2024 and sell it today you would earn a total of 190.00 from holding Cisco Systems or generate 3.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Cisco Systems vs. Edgio Inc
Performance |
| Timeline |
| Cisco Systems |
| Edgio Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Strong
Cisco Systems and Edgio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Edgio
The main advantage of trading using opposite Cisco Systems and Edgio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Edgio 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 Edgio will offset losses from the drop in Edgio's long position.| Cisco Systems vs. Juniper Networks | Cisco Systems vs. Nokia Corp ADR | Cisco Systems vs. Motorola Solutions | Cisco Systems vs. Ciena Corp |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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