Correlation Between Cisco Systems and Maine Municipal
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Maine Municipal 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 Maine Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Maine Municipal Fund, you can compare the effects of market volatilities on Cisco Systems and Maine Municipal 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 Maine Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Maine Municipal.
Diversification Opportunities for Cisco Systems and Maine Municipal
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cisco and Maine is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Maine Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maine Municipal 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 Maine Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maine Municipal has no effect on the direction of Cisco Systems i.e., Cisco Systems and Maine Municipal go up and down completely randomly.
Pair Corralation between Cisco Systems and Maine Municipal
Given the investment horizon of 90 days Cisco Systems is expected to generate 3.33 times more return on investment than Maine Municipal. However, Cisco Systems is 3.33 times more volatile than Maine Municipal Fund. It trades about 0.25 of its potential returns per unit of risk. Maine Municipal Fund is currently generating about -0.04 per unit of risk. If you would invest 5,212 in Cisco Systems on August 25, 2024 and sell it today you would earn a total of 643.00 from holding Cisco Systems or generate 12.34% 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. Maine Municipal Fund
Performance |
| Timeline |
| Cisco Systems |
| Maine Municipal |
Cisco Systems and Maine Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Maine Municipal
The main advantage of trading using opposite Cisco Systems and Maine Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Maine Municipal 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 Maine Municipal will offset losses from the drop in Maine Municipal's long position.| Cisco Systems vs. Ichor Holdings | Cisco Systems vs. Fabrinet | Cisco Systems vs. Hello Group | Cisco Systems vs. Ultra Clean Holdings |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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