Correlation Between Cisco Systems and Farmers
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Farmers 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 Farmers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Farmers And Merchants, you can compare the effects of market volatilities on Cisco Systems and Farmers 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 Farmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Farmers.
Diversification Opportunities for Cisco Systems and Farmers
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cisco and Farmers is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Farmers And Merchants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers And Merchants 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 Farmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers And Merchants has no effect on the direction of Cisco Systems i.e., Cisco Systems and Farmers go up and down completely randomly.
Pair Corralation between Cisco Systems and Farmers
Given the investment horizon of 90 days Cisco Systems is expected to generate 1.45 times more return on investment than Farmers. However, Cisco Systems is 1.45 times more volatile than Farmers And Merchants. It trades about 0.27 of its potential returns per unit of risk. Farmers And Merchants is currently generating about 0.3 per unit of risk. If you would invest 5,559 in Cisco Systems on August 31, 2024 and sell it today you would earn a total of 370.00 from holding Cisco Systems or generate 6.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cisco Systems vs. Farmers And Merchants
Performance |
| Timeline |
| Cisco Systems |
| Farmers And Merchants |
Cisco Systems and Farmers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Farmers
The main advantage of trading using opposite Cisco Systems and Farmers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Farmers 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 Farmers will offset losses from the drop in Farmers' long position.| Cisco Systems vs. Juniper Networks | Cisco Systems vs. Nokia Corp ADR | Cisco Systems vs. Motorola Solutions | Cisco Systems vs. Ciena Corp |
| Farmers vs. First National Bank | Farmers vs. Farmers Merchants Bancorp | Farmers vs. Exchange Bank | Farmers vs. First National of |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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