Correlation Between UTStarcom Holdings and Cisco Systems
Can any of the company-specific risk be diversified away by investing in both UTStarcom Holdings 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 UTStarcom Holdings and Cisco Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UTStarcom Holdings Corp and Cisco Systems, you can compare the effects of market volatilities on UTStarcom Holdings 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 UTStarcom Holdings with a short position of Cisco Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of UTStarcom Holdings and Cisco Systems.
Diversification Opportunities for UTStarcom Holdings and Cisco Systems
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UTStarcom and Cisco is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding UTStarcom Holdings Corp and Cisco Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisco Systems and UTStarcom Holdings 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 UTStarcom Holdings Corp 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 UTStarcom Holdings i.e., UTStarcom Holdings and Cisco Systems go up and down completely randomly.
Pair Corralation between UTStarcom Holdings and Cisco Systems
Assuming the 90 days trading horizon UTStarcom Holdings is expected to generate 2.08 times less return on investment than Cisco Systems. In addition to that, UTStarcom Holdings is 1.23 times more volatile than Cisco Systems. It trades about 0.11 of its total potential returns per unit of risk. Cisco Systems is currently generating about 0.28 per unit of volatility. If you would invest 103,200 in Cisco Systems on August 30, 2024 and sell it today you would earn a total of 19,643 from holding Cisco Systems or generate 19.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.62% |
| Values | Daily Returns |
UTStarcom Holdings Corp vs. Cisco Systems
Performance |
| Timeline |
| UTStarcom Holdings Corp |
| Cisco Systems |
UTStarcom Holdings and Cisco Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UTStarcom Holdings and Cisco Systems
The main advantage of trading using opposite UTStarcom Holdings and Cisco Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UTStarcom Holdings 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.| UTStarcom Holdings vs. Taiwan Semiconductor Manufacturing | UTStarcom Holdings vs. Micron Technology | UTStarcom Holdings vs. Southern Copper | UTStarcom Holdings vs. McEwen Mining |
| Cisco Systems vs. McEwen Mining | Cisco Systems vs. Cognizant Technology Solutions | Cisco Systems vs. Costco Wholesale | Cisco Systems vs. Grupo Carso SAB |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |