Correlation Between Cisco Systems and New Age
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and New Age 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 New Age into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and New Age Metals, you can compare the effects of market volatilities on Cisco Systems and New Age 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 New Age. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and New Age.
Diversification Opportunities for Cisco Systems and New Age
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cisco and New is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and New Age Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Age Metals 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 New Age. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Age Metals has no effect on the direction of Cisco Systems i.e., Cisco Systems and New Age go up and down completely randomly.
Pair Corralation between Cisco Systems and New Age
Given the investment horizon of 90 days Cisco Systems is expected to generate 0.09 times more return on investment than New Age. However, Cisco Systems is 11.07 times less risky than New Age. It trades about 0.19 of its potential returns per unit of risk. New Age Metals is currently generating about -0.05 per unit of risk. If you would invest 5,834 in Cisco Systems on October 26, 2024 and sell it today you would earn a total of 329.00 from holding Cisco Systems or generate 5.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.5% |
| Values | Daily Returns |
Cisco Systems vs. New Age Metals
Performance |
| Timeline |
| Cisco Systems |
| New Age Metals |
Cisco Systems and New Age Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and New Age
The main advantage of trading using opposite Cisco Systems and New Age positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, New Age 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 New Age will offset losses from the drop in New Age's long position.| Cisco Systems vs. Comtech Telecommunications Corp | Cisco Systems vs. NETGEAR | Cisco Systems vs. KVH Industries | Cisco Systems vs. Silicom |
| New Age vs. Vision Lithium | New Age vs. Group Ten Metals | New Age vs. Generation Mining Limited | New Age vs. Nickel Creek Platinum |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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