Correlation Between Cisco Systems and Fzdaqx

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

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

Diversification Opportunities for Cisco Systems and Fzdaqx

0.89

Correlation Coefficient

Cisco Systems  Fzdaqx

Very poor diversification

The 3 months correlation between Cisco and Fzdaqx is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Fzdaqx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fzdaqx 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 Fzdaqx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fzdaqx has no effect on the direction of Cisco Systems i.e., Cisco Systems and Fzdaqx go up and down completely randomly.

Pair Corralation between Cisco Systems and Fzdaqx

Given the investment horizon of 90 days Cisco Systems is expected to generate 7.3 times more return on investment than Fzdaqx. However, Cisco Systems is 7.3 times more volatile than Fzdaqx. It trades about 0.22 of its potential returns per unit of risk. Fzdaqx is currently generating about 0.1 per unit of risk. If you would invest  5,898  in Cisco Systems on May 2, 2025 and sell it today you would earn a total of  930.00  from holding Cisco Systems or generate 15.77% return on investment over 90 days.

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

Cisco Systems  vs.  Fzdaqx

Cisco Systems

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 17 (%) 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.

Fzdaqx

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fzdaqx are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Fzdaqx is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cisco Systems and Fzdaqx

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

The idea behind Cisco Systems and Fzdaqx 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.