Correlation Between Cisco Systems and Sterling Metals
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Sterling Metals 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 Sterling Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Sterling Metals Corp, you can compare the effects of market volatilities on Cisco Systems and Sterling Metals 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 Sterling Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Sterling Metals.
Diversification Opportunities for Cisco Systems and Sterling Metals
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cisco and Sterling is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Sterling Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Metals 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 Sterling Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Metals Corp has no effect on the direction of Cisco Systems i.e., Cisco Systems and Sterling Metals go up and down completely randomly.
Pair Corralation between Cisco Systems and Sterling Metals
Given the investment horizon of 90 days Cisco Systems is expected to generate 2.29 times less return on investment than Sterling Metals. But when comparing it to its historical volatility, Cisco Systems is 12.73 times less risky than Sterling Metals. It trades about 0.23 of its potential returns per unit of risk. Sterling Metals Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3.56 in Sterling Metals Corp on October 26, 2024 and sell it today you would lose (0.14) from holding Sterling Metals Corp or give up 3.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.33% |
| Values | Daily Returns |
Cisco Systems vs. Sterling Metals Corp
Performance |
| Timeline |
| Cisco Systems |
| Sterling Metals Corp |
Cisco Systems and Sterling Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Sterling Metals
The main advantage of trading using opposite Cisco Systems and Sterling Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Sterling Metals 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 Sterling Metals will offset losses from the drop in Sterling Metals' long position.| Cisco Systems vs. Comtech Telecommunications Corp | Cisco Systems vs. NETGEAR | Cisco Systems vs. KVH Industries | Cisco Systems vs. Silicom |
| Sterling Metals vs. Progressive Planet Solutions | Sterling Metals vs. Durango Resources | Sterling Metals vs. Avarone Metals | Sterling Metals vs. Mundoro Capital |
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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