Correlation Between Cisco Systems and LG Display
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and LG Display 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 LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and LG Display Co, you can compare the effects of market volatilities on Cisco Systems and LG Display 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 LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and LG Display.
Diversification Opportunities for Cisco Systems and LG Display
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cisco and LPL is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display 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 LG Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Display has no effect on the direction of Cisco Systems i.e., Cisco Systems and LG Display go up and down completely randomly.
Pair Corralation between Cisco Systems and LG Display
Given the investment horizon of 90 days Cisco Systems is expected to generate 0.63 times more return on investment than LG Display. However, Cisco Systems is 1.59 times less risky than LG Display. It trades about 0.25 of its potential returns per unit of risk. LG Display Co is currently generating about 0.1 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cisco Systems vs. LG Display Co
Performance |
| Timeline |
| Cisco Systems |
| LG Display |
Cisco Systems and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and LG Display
The main advantage of trading using opposite Cisco Systems and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, LG Display 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 LG Display will offset losses from the drop in LG Display's long position.| Cisco Systems vs. Juniper Networks | Cisco Systems vs. Nokia Corp ADR | Cisco Systems vs. Motorola Solutions | Cisco Systems vs. Ciena Corp |
| LG Display vs. VOXX International | LG Display vs. Emerson Radio | LG Display vs. Universal Electronics | LG Display vs. Sonos Inc |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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