Correlation Between Cisco Systems and First Keystone
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and First Keystone 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 Keystone 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 Keystone Corp, you can compare the effects of market volatilities on Cisco Systems and First Keystone 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 Keystone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and First Keystone.
Diversification Opportunities for Cisco Systems and First Keystone
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cisco and First is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and First Keystone Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Keystone Corp 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 Keystone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Keystone Corp has no effect on the direction of Cisco Systems i.e., Cisco Systems and First Keystone go up and down completely randomly.
Pair Corralation between Cisco Systems and First Keystone
Given the investment horizon of 90 days Cisco Systems is expected to generate 4.61 times less return on investment than First Keystone. But when comparing it to its historical volatility, Cisco Systems is 4.52 times less risky than First Keystone. It trades about 0.36 of its potential returns per unit of risk. First Keystone Corp is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 1,175 in First Keystone Corp on September 1, 2024 and sell it today you would earn a total of 477.00 from holding First Keystone Corp or generate 40.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cisco Systems vs. First Keystone Corp
Performance |
| Timeline |
| Cisco Systems |
| First Keystone Corp |
Cisco Systems and First Keystone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and First Keystone
The main advantage of trading using opposite Cisco Systems and First Keystone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, First Keystone 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 Keystone will offset losses from the drop in First Keystone's long position.| Cisco Systems vs. Comtech Telecommunications Corp | Cisco Systems vs. KVH Industries | Cisco Systems vs. Silicom | Cisco Systems vs. Knowles Cor |
| First Keystone vs. HUMANA INC | First Keystone vs. SCOR PK | First Keystone vs. Aquagold International | First Keystone vs. Thrivent High Yield |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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