Correlation Between Cisco Systems and First Northern
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and First Northern 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 Northern 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 Northern Community, you can compare the effects of market volatilities on Cisco Systems and First Northern 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 Northern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and First Northern.
Diversification Opportunities for Cisco Systems and First Northern
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cisco and First is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and First Northern Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Northern Community 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 Northern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Northern Community has no effect on the direction of Cisco Systems i.e., Cisco Systems and First Northern go up and down completely randomly.
Pair Corralation between Cisco Systems and First Northern
Given the investment horizon of 90 days Cisco Systems is expected to generate 1.22 times less return on investment than First Northern. In addition to that, Cisco Systems is 1.14 times more volatile than First Northern Community. It trades about 0.09 of its total potential returns per unit of risk. First Northern Community is currently generating about 0.13 per unit of volatility. If you would invest 774.00 in First Northern Community on August 29, 2024 and sell it today you would earn a total of 226.00 from holding First Northern Community or generate 29.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 85.94% |
| Values | Daily Returns |
Cisco Systems vs. First Northern Community
Performance |
| Timeline |
| Cisco Systems |
| First Northern Community |
Cisco Systems and First Northern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and First Northern
The main advantage of trading using opposite Cisco Systems and First Northern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, First Northern 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 Northern will offset losses from the drop in First Northern's long position.| Cisco Systems vs. Juniper Networks | Cisco Systems vs. NETGEAR | Cisco Systems vs. Clearfield | Cisco Systems vs. ABIVAX Socit Anonyme |
| First Northern vs. Invesco High Income | First Northern vs. Blackrock Muniholdings Ny | First Northern vs. Nuveen California Select | First Northern vs. MFS 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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