Correlation Between Cisco Systems and Mynaric AG
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Mynaric AG 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 Mynaric AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Mynaric AG ADR, you can compare the effects of market volatilities on Cisco Systems and Mynaric AG 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 Mynaric AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Mynaric AG.
Diversification Opportunities for Cisco Systems and Mynaric AG
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cisco and Mynaric is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Mynaric AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mynaric AG ADR 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 Mynaric AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mynaric AG ADR has no effect on the direction of Cisco Systems i.e., Cisco Systems and Mynaric AG go up and down completely randomly.
Pair Corralation between Cisco Systems and Mynaric AG
Given the investment horizon of 90 days Cisco Systems is expected to generate 2.83 times less return on investment than Mynaric AG. But when comparing it to its historical volatility, Cisco Systems is 6.1 times less risky than Mynaric AG. It trades about 0.28 of its potential returns per unit of risk. Mynaric AG ADR is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 94.00 in Mynaric AG ADR on August 31, 2024 and sell it today you would earn a total of 45.00 from holding Mynaric AG ADR or generate 47.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cisco Systems vs. Mynaric AG ADR
Performance |
| Timeline |
| Cisco Systems |
| Mynaric AG ADR |
Cisco Systems and Mynaric AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Mynaric AG
The main advantage of trading using opposite Cisco Systems and Mynaric AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Mynaric AG 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 Mynaric AG will offset losses from the drop in Mynaric AG's long position.| Cisco Systems vs. Juniper Networks | Cisco Systems vs. Nokia Corp ADR | Cisco Systems vs. Motorola Solutions | Cisco Systems vs. Ciena Corp |
| Mynaric AG vs. Comtech Telecommunications Corp | Mynaric AG vs. KVH Industries | Mynaric AG vs. Silicom | Mynaric AG vs. Knowles Cor |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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