Correlation Between Cisco Systems and First National
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and First National 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 First National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and First National of, you can compare the effects of market volatilities on Cisco Systems and First National 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 First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and First National.
Diversification Opportunities for Cisco Systems and First National
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cisco and First is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and First National of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National 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 First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National has no effect on the direction of Cisco Systems i.e., Cisco Systems and First National go up and down completely randomly.
Pair Corralation between Cisco Systems and First National
Given the investment horizon of 90 days Cisco Systems is expected to generate 0.59 times more return on investment than First National. However, Cisco Systems is 1.68 times less risky than First National. It trades about 0.05 of its potential returns per unit of risk. First National of is currently generating about -0.01 per unit of risk. If you would invest 4,506 in Cisco Systems on August 27, 2024 and sell it today you would earn a total of 1,349 from holding Cisco Systems or generate 29.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 80.66% |
| Values | Daily Returns |
Cisco Systems vs. First National of
Performance |
| Timeline |
| Cisco Systems |
| First National |
Cisco Systems and First National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and First National
The main advantage of trading using opposite Cisco Systems and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, First National 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 First National will offset losses from the drop in First National's long position.| Cisco Systems vs. Ichor Holdings | Cisco Systems vs. Fabrinet | Cisco Systems vs. Hello Group | Cisco Systems vs. Ultra Clean Holdings |
| First National vs. Washington Business Bank | First National vs. National Capital Bank | First National vs. Community Heritage Financial | First National vs. Citizens Financial 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |