Correlation Between Cisco Systems and RMG Acquisition
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and RMG Acquisition 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 RMG Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and RMG Acquisition Corp, you can compare the effects of market volatilities on Cisco Systems and RMG Acquisition 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 RMG Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and RMG Acquisition.
Diversification Opportunities for Cisco Systems and RMG Acquisition
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cisco and RMG is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and RMG Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RMG Acquisition Corp 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 RMG Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RMG Acquisition Corp has no effect on the direction of Cisco Systems i.e., Cisco Systems and RMG Acquisition go up and down completely randomly.
Pair Corralation between Cisco Systems and RMG Acquisition
If you would invest 4,590 in Cisco Systems on September 1, 2024 and sell it today you would earn a total of 1,331 from holding Cisco Systems or generate 29.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 0.79% |
| Values | Daily Returns |
Cisco Systems vs. RMG Acquisition Corp
Performance |
| Timeline |
| Cisco Systems |
| RMG Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Cisco Systems and RMG Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and RMG Acquisition
The main advantage of trading using opposite Cisco Systems and RMG Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, RMG Acquisition 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 RMG Acquisition will offset losses from the drop in RMG Acquisition's long position.| Cisco Systems vs. Comtech Telecommunications Corp | Cisco Systems vs. KVH Industries | Cisco Systems vs. Silicom | Cisco Systems 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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