Correlation Between Cisco Systems and IShares Healthcare
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and IShares Healthcare 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 IShares Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and iShares Healthcare ETF, you can compare the effects of market volatilities on Cisco Systems and IShares Healthcare 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 IShares Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and IShares Healthcare.
Diversification Opportunities for Cisco Systems and IShares Healthcare
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cisco and IShares is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and iShares Healthcare ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Healthcare ETF 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 IShares Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Healthcare ETF has no effect on the direction of Cisco Systems i.e., Cisco Systems and IShares Healthcare go up and down completely randomly.
Pair Corralation between Cisco Systems and IShares Healthcare
Given the investment horizon of 90 days Cisco Systems is expected to generate 1.67 times more return on investment than IShares Healthcare. However, Cisco Systems is 1.67 times more volatile than iShares Healthcare ETF. It trades about 0.25 of its potential returns per unit of risk. iShares Healthcare ETF is currently generating about 0.15 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cisco Systems vs. iShares Healthcare ETF
Performance |
| Timeline |
| Cisco Systems |
| iShares Healthcare ETF |
Cisco Systems and IShares Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and IShares Healthcare
The main advantage of trading using opposite Cisco Systems and IShares Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, IShares Healthcare 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 IShares Healthcare will offset losses from the drop in IShares Healthcare's long position.| Cisco Systems vs. Juniper Networks | Cisco Systems vs. Nokia Corp ADR | Cisco Systems vs. Motorola Solutions | Cisco Systems vs. Ciena Corp |
| IShares Healthcare vs. iShares Financials ETF | IShares Healthcare vs. iShares Consumer Discretionary | IShares Healthcare vs. iShares Industrials ETF | IShares Healthcare vs. iShares Consumer Staples |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |