Correlation Between Cisco Systems and Pacer Trendpilot

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

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

Diversification Opportunities for Cisco Systems and Pacer Trendpilot

-0.27

Correlation Coefficient

Cisco Systems  Pacer Trendpilot

Very good diversification

The 3 months correlation between Cisco and Pacer is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Pacer Trendpilot International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Trendpilot Int 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 Pacer Trendpilot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Trendpilot Int has no effect on the direction of Cisco Systems i.e., Cisco Systems and Pacer Trendpilot go up and down completely randomly.

Pair Corralation between Cisco Systems and Pacer Trendpilot

Given the investment horizon of 90 days Cisco Systems is expected to generate 1.87 times less return on investment than Pacer Trendpilot. In addition to that, Cisco Systems is 2.05 times more volatile than Pacer Trendpilot International. It trades about 0.01 of its total potential returns per unit of risk. Pacer Trendpilot International is currently generating about 0.05 per unit of volatility. If you would invest  2,378  in Pacer Trendpilot International on January 31, 2024 and sell it today you would earn a total of  465.00  from holding Pacer Trendpilot International or generate 19.55% return on investment over 90 days.

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

Cisco Systems  vs.  Pacer Trendpilot International

Cisco Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cisco Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Cisco Systems is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pacer Trendpilot Int

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Trendpilot International are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Pacer Trendpilot is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cisco Systems and Pacer Trendpilot

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

The idea behind Cisco Systems and Pacer Trendpilot International 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.