Correlation Between Cisco Systems and Univec

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

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

Diversification Opportunities for Cisco Systems and Univec

-0.85

Correlation Coefficient

Cisco Systems  Univec

Pay attention - limited upside

The 3 months correlation between Cisco and Univec is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Univec Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Univec Inc 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 Univec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Univec Inc has no effect on the direction of Cisco Systems i.e., Cisco Systems and Univec go up and down completely randomly.

Pair Corralation between Cisco Systems and Univec

Given the investment horizon of 90 days Cisco Systems is expected to generate 0.1 times more return on investment than Univec. However, Cisco Systems is 10.39 times less risky than Univec. It trades about 0.0 of its potential returns per unit of risk. Univec Inc is currently generating about -0.03 per unit of risk. If you would invest  5,863  in Cisco Systems on September 12, 2024 and sell it today you would lose (4.00) from holding Cisco Systems or give up 0.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Cisco Systems  vs.  Univec Inc

Cisco Systems

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Cisco Systems displayed solid returns over the last few months and may actually be approaching a breakup point.

Univec Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Univec Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Cisco Systems and Univec

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

The idea behind Cisco Systems and Univec Inc 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.