Correlation Between Cisco Systems and Touchstone ETF
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Touchstone ETF 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 Touchstone ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Touchstone ETF Trust, you can compare the effects of market volatilities on Cisco Systems and Touchstone ETF 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 Touchstone ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Touchstone ETF.
Diversification Opportunities for Cisco Systems and Touchstone ETF
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cisco and Touchstone is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Touchstone ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone ETF Trust 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 Touchstone ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone ETF Trust has no effect on the direction of Cisco Systems i.e., Cisco Systems and Touchstone ETF go up and down completely randomly.
Pair Corralation between Cisco Systems and Touchstone ETF
Given the investment horizon of 90 days Cisco Systems is expected to generate 14.85 times more return on investment than Touchstone ETF. However, Cisco Systems is 14.85 times more volatile than Touchstone ETF Trust. It trades about 0.12 of its potential returns per unit of risk. Touchstone ETF Trust is currently generating about 0.02 per unit of risk. If you would invest 5,870 in Cisco Systems on November 3, 2024 and sell it today you would earn a total of 190.00 from holding Cisco Systems or generate 3.24% 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. Touchstone ETF Trust
Performance |
| Timeline |
| Cisco Systems |
| Touchstone ETF Trust |
Cisco Systems and Touchstone ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Touchstone ETF
The main advantage of trading using opposite Cisco Systems and Touchstone ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Touchstone ETF 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 Touchstone ETF will offset losses from the drop in Touchstone ETF's long position.| Cisco Systems vs. Juniper Networks | Cisco Systems vs. Nokia Corp ADR | Cisco Systems vs. Motorola Solutions | Cisco Systems vs. Ciena Corp |
| Touchstone ETF vs. VanEck Vectors Moodys | Touchstone ETF vs. Valued Advisers Trust | Touchstone ETF vs. Xtrackers California Municipal | Touchstone ETF vs. Principal Exchange Traded Funds |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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