Correlation Between Cisco Systems and Pacer Pacific
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Pacer Pacific 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 Pacer Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Pacer Pacific Asset, you can compare the effects of market volatilities on Cisco Systems and Pacer Pacific 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 Pacer Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Pacer Pacific.
Diversification Opportunities for Cisco Systems and Pacer Pacific
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cisco and Pacer is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Pacer Pacific Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Pacific Asset 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 Pacer Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Pacific Asset has no effect on the direction of Cisco Systems i.e., Cisco Systems and Pacer Pacific go up and down completely randomly.
Pair Corralation between Cisco Systems and Pacer Pacific
Given the investment horizon of 90 days Cisco Systems is expected to generate 21.56 times more return on investment than Pacer Pacific. However, Cisco Systems is 21.56 times more volatile than Pacer Pacific Asset. It trades about 0.25 of its potential returns per unit of risk. Pacer Pacific Asset is currently generating about 0.25 per unit of risk. If you would invest 6,023 in Cisco Systems on November 18, 2024 and sell it today you would earn a total of 464.00 from holding Cisco Systems or generate 7.7% 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. Pacer Pacific Asset
Performance |
| Timeline |
| Cisco Systems |
| Pacer Pacific Asset |
Cisco Systems and Pacer Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Pacer Pacific
The main advantage of trading using opposite Cisco Systems and Pacer Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Pacer Pacific 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 Pacer Pacific will offset losses from the drop in Pacer Pacific's long position.| Cisco Systems vs. Juniper Networks | Cisco Systems vs. Nokia Corp ADR | Cisco Systems vs. Motorola Solutions | Cisco Systems vs. Ciena Corp |
| Pacer Pacific vs. Franklin Liberty Senior | Pacer Pacific vs. Franklin Liberty Short | Pacer Pacific vs. SPDR Bloomberg Investment | Pacer Pacific vs. VanEck Investment Grade |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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