Correlation Between Cisco Systems and Lookers Plc
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Lookers Plc 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 Lookers Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Lookers Plc, you can compare the effects of market volatilities on Cisco Systems and Lookers Plc 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 Lookers Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Lookers Plc.
Diversification Opportunities for Cisco Systems and Lookers Plc
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cisco and Lookers is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Lookers Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lookers Plc 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 Lookers Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lookers Plc has no effect on the direction of Cisco Systems i.e., Cisco Systems and Lookers Plc go up and down completely randomly.
Pair Corralation between Cisco Systems and Lookers Plc
If you would invest 5,550 in Cisco Systems on September 2, 2024 and sell it today you would earn a total of 371.00 from holding Cisco Systems or generate 6.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Cisco Systems vs. Lookers Plc
Performance |
| Timeline |
| Cisco Systems |
| Lookers Plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Cisco Systems and Lookers Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Lookers Plc
The main advantage of trading using opposite Cisco Systems and Lookers Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Lookers Plc 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 Lookers Plc will offset losses from the drop in Lookers Plc's long position.| Cisco Systems vs. Juniper Networks | Cisco Systems vs. Nokia Corp ADR | Cisco Systems vs. Motorola Solutions | Cisco Systems vs. Ciena Corp |
| Lookers Plc vs. Consumer Automotive Finance | Lookers Plc vs. Vroom Inc | Lookers Plc vs. Kaixin Auto Holdings | Lookers Plc vs. Uxin |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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