Correlation Between Cisco Systems and Capitol Federal

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

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

Diversification Opportunities for Cisco Systems and Capitol Federal

-0.37

Correlation Coefficient

Cisco Systems  Capitol Federal

Very good diversification

The 3 months correlation between Cisco and Capitol is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Capitol Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Federal Financial 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 Capitol Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Federal Financial has no effect on the direction of Cisco Systems i.e., Cisco Systems and Capitol Federal go up and down completely randomly.

Pair Corralation between Cisco Systems and Capitol Federal

Given the investment horizon of 90 days Cisco Systems is expected to generate 0.61 times more return on investment than Capitol Federal. However, Cisco Systems is 1.64 times less risky than Capitol Federal. It trades about 0.22 of its potential returns per unit of risk. Capitol Federal Financial is currently generating about 0.1 per unit of risk. If you would invest  6,746  in Cisco Systems on August 13, 2025 and sell it today you would earn a total of  425.00  from holding Cisco Systems or generate 6.3% 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.  Capitol Federal Financial

Cisco Systems

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Cisco Systems is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Capitol Federal Financial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Capitol Federal Financial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Capitol Federal is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cisco Systems and Capitol Federal

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

The idea behind Cisco Systems and Capitol Federal Financial 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.