Correlation Between Cisco Systems and Cambria Micro
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Cambria Micro 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 Cambria Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Cambria Micro And, you can compare the effects of market volatilities on Cisco Systems and Cambria Micro 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 Cambria Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Cambria Micro.
Diversification Opportunities for Cisco Systems and Cambria Micro
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cisco and Cambria is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Cambria Micro And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Micro And 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 Cambria Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Micro And has no effect on the direction of Cisco Systems i.e., Cisco Systems and Cambria Micro go up and down completely randomly.
Pair Corralation between Cisco Systems and Cambria Micro
Given the investment horizon of 90 days Cisco Systems is expected to generate 1.07 times less return on investment than Cambria Micro. In addition to that, Cisco Systems is 1.06 times more volatile than Cambria Micro And. It trades about 0.06 of its total potential returns per unit of risk. Cambria Micro And is currently generating about 0.06 per unit of volatility. If you would invest 2,429 in Cambria Micro And on August 31, 2024 and sell it today you would earn a total of 390.00 from holding Cambria Micro And or generate 16.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 61.5% |
| Values | Daily Returns |
Cisco Systems vs. Cambria Micro And
Performance |
| Timeline |
| Cisco Systems |
| Cambria Micro And |
Cisco Systems and Cambria Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Cambria Micro
The main advantage of trading using opposite Cisco Systems and Cambria Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Cambria Micro 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 Cambria Micro will offset losses from the drop in Cambria Micro's long position.| Cisco Systems vs. Juniper Networks | Cisco Systems vs. Nokia Corp ADR | Cisco Systems vs. Motorola Solutions | Cisco Systems vs. Ciena Corp |
| Cambria Micro vs. Vanguard Small Cap Value | Cambria Micro vs. Dimensional Targeted Value | Cambria Micro vs. iShares SP Small Cap | Cambria Micro vs. SPDR SP 600 |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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