Correlation Between Cisco Systems and VanEck LongFlat
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and VanEck LongFlat 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 VanEck LongFlat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and VanEck LongFlat Trend, you can compare the effects of market volatilities on Cisco Systems and VanEck LongFlat 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 VanEck LongFlat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and VanEck LongFlat.
Diversification Opportunities for Cisco Systems and VanEck LongFlat
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cisco and VanEck is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and VanEck LongFlat Trend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck LongFlat Trend 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 VanEck LongFlat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck LongFlat Trend has no effect on the direction of Cisco Systems i.e., Cisco Systems and VanEck LongFlat go up and down completely randomly.
Pair Corralation between Cisco Systems and VanEck LongFlat
Given the investment horizon of 90 days Cisco Systems is expected to generate 1.44 times more return on investment than VanEck LongFlat. However, Cisco Systems is 1.44 times more volatile than VanEck LongFlat Trend. It trades about 0.36 of its potential returns per unit of risk. VanEck LongFlat Trend is currently generating about 0.37 per unit of risk. If you would invest 5,477 in Cisco Systems on September 1, 2024 and sell it today you would earn a total of 444.00 from holding Cisco Systems or generate 8.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Cisco Systems vs. VanEck LongFlat Trend
Performance |
| Timeline |
| Cisco Systems |
| VanEck LongFlat Trend |
Cisco Systems and VanEck LongFlat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and VanEck LongFlat
The main advantage of trading using opposite Cisco Systems and VanEck LongFlat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, VanEck LongFlat 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 VanEck LongFlat will offset losses from the drop in VanEck LongFlat's long position.| Cisco Systems vs. Comtech Telecommunications Corp | Cisco Systems vs. KVH Industries | Cisco Systems vs. Silicom | Cisco Systems vs. Knowles Cor |
| VanEck LongFlat vs. VanEck Morningstar International | VanEck LongFlat vs. PIMCO RAFI Dynamic | VanEck LongFlat vs. PIMCO RAFI Dynamic | VanEck LongFlat vs. John Hancock Multifactor |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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