Correlation Between Cisco Systems and Niagara Mohawk
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Niagara Mohawk 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 Niagara Mohawk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Niagara Mohawk Power, you can compare the effects of market volatilities on Cisco Systems and Niagara Mohawk 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 Niagara Mohawk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Niagara Mohawk.
Diversification Opportunities for Cisco Systems and Niagara Mohawk
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cisco and Niagara is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Niagara Mohawk Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niagara Mohawk Power 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 Niagara Mohawk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niagara Mohawk Power has no effect on the direction of Cisco Systems i.e., Cisco Systems and Niagara Mohawk go up and down completely randomly.
Pair Corralation between Cisco Systems and Niagara Mohawk
If you would invest 5,528 in Cisco Systems on August 29, 2024 and sell it today you would earn a total of 380.50 from holding Cisco Systems or generate 6.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Cisco Systems vs. Niagara Mohawk Power
Performance |
| Timeline |
| Cisco Systems |
| Niagara Mohawk Power |
Cisco Systems and Niagara Mohawk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Niagara Mohawk
The main advantage of trading using opposite Cisco Systems and Niagara Mohawk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Niagara Mohawk 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 Niagara Mohawk will offset losses from the drop in Niagara Mohawk's long position.| Cisco Systems vs. Juniper Networks | Cisco Systems vs. NETGEAR | Cisco Systems vs. Clearfield | Cisco Systems vs. ABIVAX Socit Anonyme |
| Niagara Mohawk vs. Scholastic | Niagara Mohawk vs. CVR Partners LP | Niagara Mohawk vs. NL Industries | Niagara Mohawk vs. Avient 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 Stocks Directory module to find actively traded stocks across global markets.
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