Correlation Between Cisco Systems and Tristar Acquisition
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Tristar Acquisition 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 Tristar Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Tristar Acquisition I, you can compare the effects of market volatilities on Cisco Systems and Tristar Acquisition 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 Tristar Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Tristar Acquisition.
Diversification Opportunities for Cisco Systems and Tristar Acquisition
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cisco and Tristar is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Tristar Acquisition I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tristar Acquisition 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 Tristar Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tristar Acquisition has no effect on the direction of Cisco Systems i.e., Cisco Systems and Tristar Acquisition go up and down completely randomly.
Pair Corralation between Cisco Systems and Tristar Acquisition
Given the investment horizon of 90 days Cisco Systems is expected to generate 0.08 times more return on investment than Tristar Acquisition. However, Cisco Systems is 12.64 times less risky than Tristar Acquisition. It trades about 0.17 of its potential returns per unit of risk. Tristar Acquisition I is currently generating about -0.14 per unit of risk. If you would invest 4,590 in Cisco Systems on September 1, 2024 and sell it today you would earn a total of 1,331 from holding Cisco Systems or generate 29.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 33.33% |
| Values | Daily Returns |
Cisco Systems vs. Tristar Acquisition I
Performance |
| Timeline |
| Cisco Systems |
| Tristar Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Cisco Systems and Tristar Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Tristar Acquisition
The main advantage of trading using opposite Cisco Systems and Tristar Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Tristar Acquisition 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 Tristar Acquisition will offset losses from the drop in Tristar Acquisition's long position.| Cisco Systems vs. Comtech Telecommunications Corp | Cisco Systems vs. KVH Industries | Cisco Systems vs. Silicom | Cisco Systems vs. Knowles Cor |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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