Correlation Between Cisco Systems and Société Générale
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Société Générale 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 Société Générale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Socit Gnrale Socit, you can compare the effects of market volatilities on Cisco Systems and Société Générale 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 Société Générale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Société Générale.
Diversification Opportunities for Cisco Systems and Société Générale
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cisco and Société is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Socit Gnrale Socit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Socit Gnrale Socit 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 Société Générale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Socit Gnrale Socit has no effect on the direction of Cisco Systems i.e., Cisco Systems and Société Générale go up and down completely randomly.
Pair Corralation between Cisco Systems and Société Générale
Given the investment horizon of 90 days Cisco Systems is expected to generate 0.45 times more return on investment than Société Générale. However, Cisco Systems is 2.23 times less risky than Société Générale. It trades about 0.17 of its potential returns per unit of risk. Socit Gnrale Socit is currently generating about -0.01 per unit of risk. If you would invest 4,590 in Cisco Systems on August 30, 2024 and sell it today you would earn a total of 1,339 from holding Cisco Systems or generate 29.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.83% |
| Values | Daily Returns |
Cisco Systems vs. Socit Gnrale Socit
Performance |
| Timeline |
| Cisco Systems |
| Socit Gnrale Socit |
Cisco Systems and Société Générale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Société Générale
The main advantage of trading using opposite Cisco Systems and Société Générale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Société Générale 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 Société Générale will offset losses from the drop in Société Générale's long position.| Cisco Systems vs. Juniper Networks | Cisco Systems vs. Nokia Corp ADR | Cisco Systems vs. Motorola Solutions | Cisco Systems vs. Ciena Corp |
| Société Générale vs. Banco Bradesco SA | Société Générale vs. Itau Unibanco Banco | Société Générale vs. Lloyds Banking Group | Société Générale vs. Deutsche Bank AG |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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