Correlation Between Cisco Systems and Ruths Hospitality
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Ruths Hospitality 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 Ruths Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Ruths Hospitality Group, you can compare the effects of market volatilities on Cisco Systems and Ruths Hospitality 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 Ruths Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Ruths Hospitality.
Diversification Opportunities for Cisco Systems and Ruths Hospitality
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cisco and Ruths is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Ruths Hospitality Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruths Hospitality 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 Ruths Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ruths Hospitality has no effect on the direction of Cisco Systems i.e., Cisco Systems and Ruths Hospitality go up and down completely randomly.
Pair Corralation between Cisco Systems and Ruths Hospitality
Given the investment horizon of 90 days Cisco Systems is expected to generate 12.78 times less return on investment than Ruths Hospitality. But when comparing it to its historical volatility, Cisco Systems is 3.94 times less risky than Ruths Hospitality. It trades about 0.04 of its potential returns per unit of risk. Ruths Hospitality Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,636 in Ruths Hospitality Group on August 24, 2024 and sell it today you would earn a total of 513.00 from holding Ruths Hospitality Group or generate 31.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 12.77% |
| Values | Daily Returns |
Cisco Systems vs. Ruths Hospitality Group
Performance |
| Timeline |
| Cisco Systems |
| Ruths Hospitality |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Cisco Systems and Ruths Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Ruths Hospitality
The main advantage of trading using opposite Cisco Systems and Ruths Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Ruths Hospitality 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 Ruths Hospitality will offset losses from the drop in Ruths Hospitality's long position.| Cisco Systems vs. Eshallgo Class A | Cisco Systems vs. Amtech Systems | Cisco Systems vs. Gold Fields Ltd | Cisco Systems vs. Aegean Airlines SA |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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