Correlation Between Cisco Systems and Fentura Financial
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Fentura Financial 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 Fentura Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Fentura Financial, you can compare the effects of market volatilities on Cisco Systems and Fentura Financial 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 Fentura Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Fentura Financial.
Diversification Opportunities for Cisco Systems and Fentura Financial
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cisco and Fentura is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Fentura Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fentura Financial 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 Fentura Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fentura Financial has no effect on the direction of Cisco Systems i.e., Cisco Systems and Fentura Financial go up and down completely randomly.
Pair Corralation between Cisco Systems and Fentura Financial
Given the investment horizon of 90 days Cisco Systems is expected to generate 2.06 times less return on investment than Fentura Financial. But when comparing it to its historical volatility, Cisco Systems is 1.72 times less risky than Fentura Financial. It trades about 0.16 of its potential returns per unit of risk. Fentura Financial is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,310 in Fentura Financial on November 28, 2024 and sell it today you would earn a total of 1,965 from holding Fentura Financial or generate 85.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 88.52% |
| Values | Daily Returns |
Cisco Systems vs. Fentura Financial
Performance |
| Timeline |
| Cisco Systems |
| Fentura Financial |
Cisco Systems and Fentura Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Fentura Financial
The main advantage of trading using opposite Cisco Systems and Fentura Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Fentura Financial 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 Fentura Financial will offset losses from the drop in Fentura Financial's long position.| Cisco Systems vs. Mynaric AG ADR | Cisco Systems vs. KVH Industries | Cisco Systems vs. Telesat Corp | Cisco Systems vs. Digi International |
| Fentura Financial vs. Pioneer Bankcorp | Fentura Financial vs. Liberty Northwest Bancorp | Fentura Financial vs. First Community | Fentura Financial vs. Coeur dAlene 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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