Correlation Between Cisco Systems and Marathon Gold

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

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

Diversification Opportunities for Cisco Systems and Marathon Gold

-0.3

Correlation Coefficient

Cisco Systems  Marathon Gold

Very good diversification

The 3 months correlation between Cisco and Marathon is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Marathon Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Gold 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 Marathon Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marathon Gold has no effect on the direction of Cisco Systems i.e., Cisco Systems and Marathon Gold go up and down completely randomly.

Pair Corralation between Cisco Systems and Marathon Gold

If you would invest  4,932  in Cisco Systems on September 4, 2024 and sell it today you would earn a total of  1,011  from holding Cisco Systems or generate 20.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Cisco Systems  vs.  Marathon Gold

Cisco Systems

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Cisco Systems displayed solid returns over the last few months and may actually be approaching a breakup point.

Marathon Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marathon Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Marathon Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cisco Systems and Marathon Gold

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

The idea behind Cisco Systems and Marathon Gold 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.