Correlation Between Cisco Systems and 031162DG2

Can any of the company-specific risk be diversified away by investing in both Cisco Systems and 031162DG2 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 031162DG2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cisco Systems and AMGN 44 22 FEB 62, you can compare the effects of market volatilities on Cisco Systems and 031162DG2 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 031162DG2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and 031162DG2.

Diversification Opportunities for Cisco Systems and 031162DG2

-0.68

Correlation Coefficient

Cisco Systems  031162DG2

Excellent diversification

The 3 months correlation between Cisco and 031162DG2 is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and AMGN 44 22 FEB 62 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMGN 44 22 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 031162DG2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMGN 44 22 has no effect on the direction of Cisco Systems i.e., Cisco Systems and 031162DG2 go up and down completely randomly.

Pair Corralation between Cisco Systems and 031162DG2

Given the investment horizon of 90 days Cisco Systems is expected to generate 0.99 times more return on investment than 031162DG2. However, Cisco Systems is 1.01 times less risky than 031162DG2. It trades about 0.31 of its potential returns per unit of risk. AMGN 44 22 FEB 62 is currently generating about -0.04 per unit of risk. If you would invest  4,876  in Cisco Systems on September 5, 2024 and sell it today you would earn a total of  1,072  from holding Cisco Systems or generate 21.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	84.38%
Values	Daily Returns

Cisco Systems  vs.  AMGN 44 22 FEB 62

Cisco Systems

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 24 (%) 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.

AMGN 44 22

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMGN 44 22 FEB 62 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 031162DG2 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cisco Systems and 031162DG2

The main advantage of trading using opposite Cisco Systems and 031162DG2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, 031162DG2 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 031162DG2 will offset losses from the drop in 031162DG2's long position.

The idea behind Cisco Systems and AMGN 44 22 FEB 62 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.