Correlation Between Ituran Location and Cisco Systems
Can any of the company-specific risk be diversified away by investing in both Ituran Location and Cisco Systems 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 Ituran Location and Cisco Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ituran Location and and Cisco Systems, you can compare the effects of market volatilities on Ituran Location and Cisco Systems 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 Ituran Location with a short position of Cisco Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ituran Location and Cisco Systems.
Diversification Opportunities for Ituran Location and Cisco Systems
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ituran and Cisco is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ituran Location and and Cisco Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisco Systems and Ituran Location 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 Ituran Location and are associated (or correlated) with Cisco Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cisco Systems has no effect on the direction of Ituran Location i.e., Ituran Location and Cisco Systems go up and down completely randomly.
Pair Corralation between Ituran Location and Cisco Systems
Given the investment horizon of 90 days Ituran Location and is expected to generate 1.72 times more return on investment than Cisco Systems. However, Ituran Location is 1.72 times more volatile than Cisco Systems. It trades about 0.36 of its potential returns per unit of risk. Cisco Systems is currently generating about 0.01 per unit of risk. If you would invest 2,780 in Ituran Location and on September 12, 2024 and sell it today you would earn a total of 332.00 from holding Ituran Location and or generate 11.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ituran Location and vs. Cisco Systems
Performance |
| Timeline |
| Ituran Location |
| Cisco Systems |
Ituran Location and Cisco Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ituran Location and Cisco Systems
The main advantage of trading using opposite Ituran Location and Cisco Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ituran Location position performs unexpectedly, Cisco Systems 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 Cisco Systems will offset losses from the drop in Cisco Systems' long position.| Ituran Location vs. Silicom | Ituran Location vs. Allot Communications | Ituran Location vs. Sapiens International | Ituran Location vs. Formula Systems 1985 |
| Cisco Systems vs. Victory Integrity Smallmid Cap | Cisco Systems vs. Hilton Worldwide Holdings | Cisco Systems vs. NVIDIA | Cisco Systems vs. JPMorgan Chase Co |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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