Correlation Between Cisco Systems and IShares Inflation
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and IShares Inflation 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 IShares Inflation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and iShares Inflation Hedged, you can compare the effects of market volatilities on Cisco Systems and IShares Inflation 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 IShares Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and IShares Inflation.
Diversification Opportunities for Cisco Systems and IShares Inflation
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cisco and IShares is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and iShares Inflation Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Inflation Hedged 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 IShares Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Inflation Hedged has no effect on the direction of Cisco Systems i.e., Cisco Systems and IShares Inflation go up and down completely randomly.
Pair Corralation between Cisco Systems and IShares Inflation
Given the investment horizon of 90 days Cisco Systems is expected to generate 2.63 times more return on investment than IShares Inflation. However, Cisco Systems is 2.63 times more volatile than iShares Inflation Hedged. It trades about 0.26 of its potential returns per unit of risk. iShares Inflation Hedged is currently generating about 0.08 per unit of risk. If you would invest 5,568 in Cisco Systems on August 30, 2024 and sell it today you would earn a total of 361.00 from holding Cisco Systems or generate 6.48% 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. iShares Inflation Hedged
Performance |
| Timeline |
| Cisco Systems |
| iShares Inflation Hedged |
Cisco Systems and IShares Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and IShares Inflation
The main advantage of trading using opposite Cisco Systems and IShares Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, IShares Inflation 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 IShares Inflation will offset losses from the drop in IShares Inflation's long position.| Cisco Systems vs. Juniper Networks | Cisco Systems vs. Nokia Corp ADR | Cisco Systems vs. Motorola Solutions | Cisco Systems vs. Ciena Corp |
| IShares Inflation vs. iShares Interest Rate | IShares Inflation vs. iShares Interest Rate | IShares Inflation vs. iShares Edge Investment | IShares Inflation vs. iShares Interest Rate |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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