Correlation Between Cisco Systems and Sabre Gold
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Sabre Gold 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 Sabre Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Sabre Gold Mines, you can compare the effects of market volatilities on Cisco Systems and Sabre Gold 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 Sabre Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Sabre Gold.
Diversification Opportunities for Cisco Systems and Sabre Gold
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cisco and Sabre is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Sabre Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Gold Mines 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 Sabre Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Gold Mines has no effect on the direction of Cisco Systems i.e., Cisco Systems and Sabre Gold go up and down completely randomly.
Pair Corralation between Cisco Systems and Sabre Gold
Given the investment horizon of 90 days Cisco Systems is expected to generate 0.16 times more return on investment than Sabre Gold. However, Cisco Systems is 6.08 times less risky than Sabre Gold. It trades about 0.29 of its potential returns per unit of risk. Sabre Gold Mines is currently generating about 0.03 per unit of risk. If you would invest 5,583 in Cisco Systems on September 4, 2024 and sell it today you would earn a total of 360.00 from holding Cisco Systems or generate 6.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Cisco Systems vs. Sabre Gold Mines
Performance |
| Timeline |
| Cisco Systems |
| Sabre Gold Mines |
Cisco Systems and Sabre Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Sabre Gold
The main advantage of trading using opposite Cisco Systems and Sabre Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Sabre Gold 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 Sabre Gold will offset losses from the drop in Sabre Gold's long position.| Cisco Systems vs. Cambium Networks Corp | Cisco Systems vs. KVH Industries | Cisco Systems vs. Knowles Cor | Cisco Systems vs. Ituran Location and |
| Sabre Gold vs. Telefonica Brasil SA | Sabre Gold vs. Vodafone Group PLC | Sabre Gold vs. Grupo Televisa SAB | Sabre Gold vs. America Movil SAB |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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