Correlation Between Cisco Systems and MicroSectors Gold

Can any of the company-specific risk be diversified away by investing in both Cisco Systems and MicroSectors 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 MicroSectors 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 MicroSectors Gold 3X, you can compare the effects of market volatilities on Cisco Systems and MicroSectors 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 MicroSectors Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and MicroSectors Gold.

Diversification Opportunities for Cisco Systems and MicroSectors Gold

-0.44

Correlation Coefficient

Cisco Systems  MicroSectors Gold

Very good diversification

The 3 months correlation between Cisco and MicroSectors is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and MicroSectors Gold 3X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectors 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 MicroSectors Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectors Gold has no effect on the direction of Cisco Systems i.e., Cisco Systems and MicroSectors Gold go up and down completely randomly.

Pair Corralation between Cisco Systems and MicroSectors Gold

Given the investment horizon of 90 days Cisco Systems is expected to generate 0.37 times more return on investment than MicroSectors Gold. However, Cisco Systems is 2.7 times less risky than MicroSectors Gold. It trades about 0.21 of its potential returns per unit of risk. MicroSectors Gold 3X is currently generating about -0.02 per unit of risk. If you would invest  5,941  in Cisco Systems on May 9, 2025 and sell it today you would earn a total of  980.00  from holding Cisco Systems or generate 16.5% return on investment over 90 days.

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

Cisco Systems  vs.  MicroSectors Gold 3X

Cisco Systems

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 16 (%) 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.

MicroSectors Gold

Risk-Adjusted Performance

Weakest

Over the last 90 days MicroSectors Gold 3X has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, MicroSectors Gold is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Cisco Systems and MicroSectors Gold

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

The idea behind Cisco Systems and MicroSectors Gold 3X 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.