Correlation Between Cisco Systems and Credit Suisse
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Credit Suisse 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 Credit Suisse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Credit Suisse X Links, you can compare the effects of market volatilities on Cisco Systems and Credit Suisse 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 Credit Suisse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Credit Suisse.
Diversification Opportunities for Cisco Systems and Credit Suisse
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cisco and Credit is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Credit Suisse X Links in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Suisse X 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 Credit Suisse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Suisse X has no effect on the direction of Cisco Systems i.e., Cisco Systems and Credit Suisse go up and down completely randomly.
Pair Corralation between Cisco Systems and Credit Suisse
Given the investment horizon of 90 days Cisco Systems is expected to generate 1.42 times more return on investment than Credit Suisse. However, Cisco Systems is 1.42 times more volatile than Credit Suisse X Links. It trades about 0.25 of its potential returns per unit of risk. Credit Suisse X Links is currently generating about 0.1 per unit of risk. If you would invest 5,225 in Cisco Systems on August 26, 2024 and sell it today you would earn a total of 630.00 from holding Cisco Systems or generate 12.06% 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. Credit Suisse X Links
Performance |
| Timeline |
| Cisco Systems |
| Credit Suisse X |
Cisco Systems and Credit Suisse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Credit Suisse
The main advantage of trading using opposite Cisco Systems and Credit Suisse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Credit Suisse 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 Credit Suisse will offset losses from the drop in Credit Suisse's long position.| Cisco Systems vs. Ichor Holdings | Cisco Systems vs. Fabrinet | Cisco Systems vs. Hello Group | Cisco Systems vs. Ultra Clean Holdings |
| Credit Suisse vs. Aquagold International | Credit Suisse vs. Morningstar Unconstrained Allocation | Credit Suisse vs. High Yield Municipal Fund | Credit Suisse 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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