Correlation Between Cisco Systems and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and SPDR SP 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 SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and SPDR SP 500, you can compare the effects of market volatilities on Cisco Systems and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and SPDR SP.
Diversification Opportunities for Cisco Systems and SPDR SP
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cisco and SPDR is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and SPDR SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 500 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP 500 has no effect on the direction of Cisco Systems i.e., Cisco Systems and SPDR SP go up and down completely randomly.
Pair Corralation between Cisco Systems and SPDR SP
Given the investment horizon of 90 days Cisco Systems is expected to generate 0.66 times more return on investment than SPDR SP. However, Cisco Systems is 1.51 times less risky than SPDR SP. It trades about 0.25 of its potential returns per unit of risk. SPDR SP 500 is currently generating about 0.02 per unit of risk. If you would invest 5,858 in Cisco Systems on October 22, 2024 and sell it today you would earn a total of 165.00 from holding Cisco Systems or generate 2.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cisco Systems vs. SPDR SP 500
Performance |
| Timeline |
| Cisco Systems |
| SPDR SP 500 |
Cisco Systems and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and SPDR SP
The main advantage of trading using opposite Cisco Systems and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP's long position.| Cisco Systems vs. Juniper Networks | Cisco Systems vs. Nokia Corp ADR | Cisco Systems vs. Motorola Solutions | Cisco Systems vs. Ciena Corp |
| SPDR SP vs. iShares MSCI KLD | SPDR SP vs. iShares ESG Aware | SPDR SP vs. iShares MSCI ACWI | SPDR SP vs. SPDR SSGA Gender |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |