Correlation Between Cisco Systems and Journey Energy
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Journey Energy 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 Journey Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Journey Energy, you can compare the effects of market volatilities on Cisco Systems and Journey Energy 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 Journey Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Journey Energy.
Diversification Opportunities for Cisco Systems and Journey Energy
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cisco and Journey is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Journey Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Journey Energy 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 Journey Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Journey Energy has no effect on the direction of Cisco Systems i.e., Cisco Systems and Journey Energy go up and down completely randomly.
Pair Corralation between Cisco Systems and Journey Energy
Given the investment horizon of 90 days Cisco Systems is expected to generate 0.41 times more return on investment than Journey Energy. However, Cisco Systems is 2.45 times less risky than Journey Energy. It trades about 0.05 of its potential returns per unit of risk. Journey Energy is currently generating about -0.05 per unit of risk. If you would invest 4,603 in Cisco Systems on August 29, 2024 and sell it today you would earn a total of 1,306 from holding Cisco Systems or generate 28.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cisco Systems vs. Journey Energy
Performance |
| Timeline |
| Cisco Systems |
| Journey Energy |
Cisco Systems and Journey Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Journey Energy
The main advantage of trading using opposite Cisco Systems and Journey Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Journey Energy 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 Journey Energy will offset losses from the drop in Journey Energy's long position.| Cisco Systems vs. Juniper Networks | Cisco Systems vs. NETGEAR | Cisco Systems vs. Clearfield | Cisco Systems vs. ABIVAX Socit Anonyme |
| Journey Energy vs. Frontera Energy Corp | Journey Energy vs. Eco Oil Gas | Journey Energy vs. Total Helium | Journey Energy vs. Avanti Energy |
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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