Correlation Between Cisco Systems and REPUBLIC

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Can any of the company-specific risk be diversified away by investing in both Cisco Systems and REPUBLIC 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 REPUBLIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and REPUBLIC SVCS INC, you can compare the effects of market volatilities on Cisco Systems and REPUBLIC 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 REPUBLIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and REPUBLIC.

Diversification Opportunities for Cisco Systems and REPUBLIC

0.24
  Correlation Coefficient

Modest diversification

The 3 months correlation between Cisco and REPUBLIC is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and REPUBLIC SVCS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REPUBLIC SVCS INC 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 REPUBLIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REPUBLIC SVCS INC has no effect on the direction of Cisco Systems i.e., Cisco Systems and REPUBLIC go up and down completely randomly.

Pair Corralation between Cisco Systems and REPUBLIC

Given the investment horizon of 90 days Cisco Systems is expected to generate 13.81 times more return on investment than REPUBLIC. However, Cisco Systems is 13.81 times more volatile than REPUBLIC SVCS INC. It trades about 0.18 of its potential returns per unit of risk. REPUBLIC SVCS INC is currently generating about 0.15 per unit of risk. If you would invest  5,920  in Cisco Systems on November 9, 2024 and sell it today you would earn a total of  307.00  from holding Cisco Systems or generate 5.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.24%
ValuesDaily Returns

Cisco Systems  vs.  REPUBLIC SVCS INC

 Performance 
       Timeline  
Cisco Systems 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental indicators, Cisco Systems may actually be approaching a critical reversion point that can send shares even higher in March 2025.
REPUBLIC SVCS INC 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in REPUBLIC SVCS INC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, REPUBLIC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cisco Systems and REPUBLIC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cisco Systems and REPUBLIC

The main advantage of trading using opposite Cisco Systems and REPUBLIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, REPUBLIC 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 REPUBLIC will offset losses from the drop in REPUBLIC's long position.
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The idea behind Cisco Systems and REPUBLIC SVCS INC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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