Correlation Between Cisco Systems and AMERICAN
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By analyzing existing cross correlation between Cisco Systems and AMERICAN INTERNATIONAL GROUP, you can compare the effects of market volatilities on Cisco Systems and AMERICAN 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 AMERICAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and AMERICAN.
Diversification Opportunities for Cisco Systems and AMERICAN
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cisco and AMERICAN is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and AMERICAN INTERNATIONAL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERICAN INTERNATIONAL 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 AMERICAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMERICAN INTERNATIONAL has no effect on the direction of Cisco Systems i.e., Cisco Systems and AMERICAN go up and down completely randomly.
Pair Corralation between Cisco Systems and AMERICAN
Given the investment horizon of 90 days Cisco Systems is expected to generate 127.96 times less return on investment than AMERICAN. But when comparing it to its historical volatility, Cisco Systems is 80.93 times less risky than AMERICAN. It trades about 0.06 of its potential returns per unit of risk. AMERICAN INTERNATIONAL GROUP is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 8,859 in AMERICAN INTERNATIONAL GROUP on August 31, 2024 and sell it today you would lose (125.00) from holding AMERICAN INTERNATIONAL GROUP or give up 1.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 84.49% |
| Values | Daily Returns |
Cisco Systems vs. AMERICAN INTERNATIONAL GROUP
Performance |
| Timeline |
| Cisco Systems |
| AMERICAN INTERNATIONAL |
Cisco Systems and AMERICAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and AMERICAN
The main advantage of trading using opposite Cisco Systems and AMERICAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, AMERICAN 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 AMERICAN will offset losses from the drop in AMERICAN's long position.| Cisco Systems vs. Juniper Networks | Cisco Systems vs. Nokia Corp ADR | Cisco Systems vs. Motorola Solutions | Cisco Systems vs. Ciena Corp |
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 Stocks Directory module to find actively traded stocks across global markets.
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