Correlation Between Cisco Systems and FG Group
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and FG Group 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 FG Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and FG Group Holdings, you can compare the effects of market volatilities on Cisco Systems and FG Group 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 FG Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and FG Group.
Diversification Opportunities for Cisco Systems and FG Group
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cisco and FGH is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and FG Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FG Group Holdings 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 FG Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FG Group Holdings has no effect on the direction of Cisco Systems i.e., Cisco Systems and FG Group go up and down completely randomly.
Pair Corralation between Cisco Systems and FG Group
Given the investment horizon of 90 days Cisco Systems is expected to generate 0.33 times more return on investment than FG Group. However, Cisco Systems is 3.06 times less risky than FG Group. It trades about 0.05 of its potential returns per unit of risk. FG Group Holdings is currently generating about -0.07 per unit of risk. If you would invest 4,665 in Cisco Systems on September 3, 2024 and sell it today you would earn a total of 1,256 from holding Cisco Systems or generate 26.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 30.91% |
| Values | Daily Returns |
Cisco Systems vs. FG Group Holdings
Performance |
| Timeline |
| Cisco Systems |
| FG Group Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Cisco Systems and FG Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and FG Group
The main advantage of trading using opposite Cisco Systems and FG Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, FG Group 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 FG Group will offset losses from the drop in FG Group's long position.| Cisco Systems vs. Highway Holdings Limited | Cisco Systems vs. QCR Holdings | Cisco Systems vs. Partner Communications | Cisco Systems vs. Acumen Pharmaceuticals |
| FG Group vs. OneSpaWorld Holdings | FG Group vs. Games Workshop Group | FG Group vs. Johnson Outdoors | FG Group vs. American Outdoor Brands |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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