Correlation Between AMERICAN and Cisco Systems
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By analyzing existing cross correlation between AMERICAN HONDA FINANCE and Cisco Systems, you can compare the effects of market volatilities on AMERICAN 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 AMERICAN with a short position of Cisco Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMERICAN and Cisco Systems.
Diversification Opportunities for AMERICAN and Cisco Systems
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AMERICAN and Cisco is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding AMERICAN HONDA FINANCE and Cisco Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisco Systems and AMERICAN 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 AMERICAN HONDA FINANCE 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 AMERICAN i.e., AMERICAN and Cisco Systems go up and down completely randomly.
Pair Corralation between AMERICAN and Cisco Systems
Assuming the 90 days trading horizon AMERICAN HONDA FINANCE is expected to under-perform the Cisco Systems. But the bond apears to be less risky and, when comparing its historical volatility, AMERICAN HONDA FINANCE is 1.23 times less risky than Cisco Systems. The bond trades about -0.21 of its potential returns per unit of risk. The Cisco Systems is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 5,477 in Cisco Systems on September 1, 2024 and sell it today you would earn a total of 444.00 from holding Cisco Systems or generate 8.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
AMERICAN HONDA FINANCE vs. Cisco Systems
Performance |
| Timeline |
| AMERICAN HONDA FINANCE |
| Cisco Systems |
AMERICAN and Cisco Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMERICAN and Cisco Systems
The main advantage of trading using opposite AMERICAN and Cisco Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMERICAN 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.| AMERICAN vs. AEP TEX INC | AMERICAN vs. US BANK NATIONAL | AMERICAN vs. American Express | AMERICAN vs. Chevron Corp |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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