Correlation Between Cisco Systems and FAST Acquisition

Can any of the company-specific risk be diversified away by investing in both Cisco Systems and FAST Acquisition 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 FAST Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cisco Systems and FAST Acquisition II, you can compare the effects of market volatilities on Cisco Systems and FAST Acquisition 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 FAST Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and FAST Acquisition.

Diversification Opportunities for Cisco Systems and FAST Acquisition

0.88

Correlation Coefficient

Cisco Systems  FAST Acquisition

Very poor diversification

The 3 months correlation between Cisco and FAST is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and FAST Acquisition II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAST Acquisition 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 FAST Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAST Acquisition has no effect on the direction of Cisco Systems i.e., Cisco Systems and FAST Acquisition go up and down completely randomly.

Pair Corralation between Cisco Systems and FAST Acquisition

If you would invest  5,023  in Cisco Systems on September 17, 2024 and sell it today you would earn a total of  839.00  from holding Cisco Systems or generate 16.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.54%
Values	Daily Returns

Cisco Systems  vs.  FAST Acquisition II

Cisco Systems

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Cisco Systems displayed solid returns over the last few months and may actually be approaching a breakup point.

FAST Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FAST Acquisition II has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, FAST Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cisco Systems and FAST Acquisition

The main advantage of trading using opposite Cisco Systems and FAST Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, FAST Acquisition 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 FAST Acquisition will offset losses from the drop in FAST Acquisition's long position.

The idea behind Cisco Systems and FAST Acquisition II 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.