Correlation Between Cisco Systems and Stone Ridge
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Stone Ridge 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 Stone Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Stone Ridge 2063, you can compare the effects of market volatilities on Cisco Systems and Stone Ridge 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 Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Stone Ridge.
Diversification Opportunities for Cisco Systems and Stone Ridge
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cisco and Stone is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Stone Ridge 2063 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Ridge 2063 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 Stone Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Ridge 2063 has no effect on the direction of Cisco Systems i.e., Cisco Systems and Stone Ridge go up and down completely randomly.
Pair Corralation between Cisco Systems and Stone Ridge
Given the investment horizon of 90 days Cisco Systems is expected to generate 1.38 times more return on investment than Stone Ridge. However, Cisco Systems is 1.38 times more volatile than Stone Ridge 2063. It trades about 0.36 of its potential returns per unit of risk. Stone Ridge 2063 is currently generating about 0.05 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cisco Systems vs. Stone Ridge 2063
Performance |
| Timeline |
| Cisco Systems |
| Stone Ridge 2063 |
Cisco Systems and Stone Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Stone Ridge
The main advantage of trading using opposite Cisco Systems and Stone Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Stone Ridge 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 Stone Ridge will offset losses from the drop in Stone Ridge's long position.| Cisco Systems vs. Comtech Telecommunications Corp | Cisco Systems vs. KVH Industries | Cisco Systems vs. Silicom | Cisco Systems vs. Knowles Cor |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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