Correlation Between Cisco Systems and Maple Leaf
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Maple Leaf 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 Maple Leaf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Maple Leaf Foods, you can compare the effects of market volatilities on Cisco Systems and Maple Leaf 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 Maple Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Maple Leaf.
Diversification Opportunities for Cisco Systems and Maple Leaf
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cisco and Maple is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Maple Leaf Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maple Leaf Foods 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 Maple Leaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maple Leaf Foods has no effect on the direction of Cisco Systems i.e., Cisco Systems and Maple Leaf go up and down completely randomly.
Pair Corralation between Cisco Systems and Maple Leaf
Given the investment horizon of 90 days Cisco Systems is expected to generate 0.49 times more return on investment than Maple Leaf. However, Cisco Systems is 2.02 times less risky than Maple Leaf. It trades about 0.05 of its potential returns per unit of risk. Maple Leaf Foods is currently generating about 0.01 per unit of risk. If you would invest 4,527 in Cisco Systems on August 28, 2024 and sell it today you would earn a total of 1,347 from holding Cisco Systems or generate 29.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.15% |
| Values | Daily Returns |
Cisco Systems vs. Maple Leaf Foods
Performance |
| Timeline |
| Cisco Systems |
| Maple Leaf Foods |
Cisco Systems and Maple Leaf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Maple Leaf
The main advantage of trading using opposite Cisco Systems and Maple Leaf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Maple Leaf 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 Maple Leaf will offset losses from the drop in Maple Leaf's long position.| Cisco Systems vs. Ichor Holdings | Cisco Systems vs. Fabrinet | Cisco Systems vs. Hello Group | Cisco Systems vs. Ultra Clean Holdings |
| Maple Leaf vs. Embotelladora Andina SA | Maple Leaf vs. Signet International Holdings | Maple Leaf vs. National Beverage Corp | Maple Leaf vs. PT Astra International |
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 Stocks Directory module to find actively traded stocks across global markets.
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