Correlation Between Cisco Systems and Mint
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Mint 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 Mint into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and The Mint, you can compare the effects of market volatilities on Cisco Systems and Mint 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 Mint. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Mint.
Diversification Opportunities for Cisco Systems and Mint
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cisco and Mint is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and The Mint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mint 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 Mint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mint has no effect on the direction of Cisco Systems i.e., Cisco Systems and Mint go up and down completely randomly.
Pair Corralation between Cisco Systems and Mint
Given the investment horizon of 90 days Cisco Systems is expected to generate 437.81 times less return on investment than Mint. But when comparing it to its historical volatility, Cisco Systems is 273.76 times less risky than Mint. It trades about 0.19 of its potential returns per unit of risk. The Mint is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1.85 in The Mint on September 13, 2024 and sell it today you would lose (0.65) from holding The Mint or give up 35.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.73% |
| Values | Daily Returns |
Cisco Systems vs. The Mint
Performance |
| Timeline |
| Cisco Systems |
| Mint |
Cisco Systems and Mint Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Mint
The main advantage of trading using opposite Cisco Systems and Mint positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Mint 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 Mint will offset losses from the drop in Mint's long position.| Cisco Systems vs. Juniper Networks | Cisco Systems vs. Nokia Corp ADR | Cisco Systems vs. Motorola Solutions | Cisco Systems vs. Ciena Corp |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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