Correlation Between Cisco Systems and Investment Grade
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Investment Grade 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 Investment Grade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Investment Grade Porate, you can compare the effects of market volatilities on Cisco Systems and Investment Grade 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 Investment Grade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Investment Grade.
Diversification Opportunities for Cisco Systems and Investment Grade
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cisco and Investment is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Investment Grade Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Grade Porate 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 Investment Grade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Grade Porate has no effect on the direction of Cisco Systems i.e., Cisco Systems and Investment Grade go up and down completely randomly.
Pair Corralation between Cisco Systems and Investment Grade
Given the investment horizon of 90 days Cisco Systems is expected to generate 2.72 times more return on investment than Investment Grade. However, Cisco Systems is 2.72 times more volatile than Investment Grade Porate. It trades about 0.27 of its potential returns per unit of risk. Investment Grade Porate is currently generating about 0.07 per unit of risk. If you would invest 5,528 in Cisco Systems on August 28, 2024 and sell it today you would earn a total of 346.00 from holding Cisco Systems or generate 6.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cisco Systems vs. Investment Grade Porate
Performance |
| Timeline |
| Cisco Systems |
| Investment Grade Porate |
Cisco Systems and Investment Grade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Investment Grade
The main advantage of trading using opposite Cisco Systems and Investment Grade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Investment Grade 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 Investment Grade will offset losses from the drop in Investment Grade's long position.| Cisco Systems vs. Ichor Holdings | Cisco Systems vs. Fabrinet | Cisco Systems vs. Hello Group | Cisco Systems vs. Ultra Clean Holdings |
| Investment Grade vs. Transamerica Emerging Markets | Investment Grade vs. Nasdaq 100 2x Strategy | Investment Grade vs. Siit Emerging Markets | Investment Grade vs. Investec Emerging Markets |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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