Correlation Between Cisco Systems and Short Term

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

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

Diversification Opportunities for Cisco Systems and Short Term

0.95

Correlation Coefficient

Cisco Systems  Short Term

Almost no diversification

The 3 months correlation between Cisco and Short is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and The Short Term Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term 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 Short Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term has no effect on the direction of Cisco Systems i.e., Cisco Systems and Short Term go up and down completely randomly.

Pair Corralation between Cisco Systems and Short Term

Given the investment horizon of 90 days Cisco Systems is expected to generate 17.55 times more return on investment than Short Term. However, Cisco Systems is 17.55 times more volatile than The Short Term Municipal. It trades about 0.24 of its potential returns per unit of risk. The Short Term Municipal is currently generating about 0.31 per unit of risk. If you would invest  5,777  in Cisco Systems on May 1, 2025 and sell it today you would earn a total of  1,019  from holding Cisco Systems or generate 17.64% return on investment over 90 days.

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

Cisco Systems  vs.  The Short Term Municipal

Cisco Systems

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 18 (%) 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.

Short Term

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Short Term Municipal are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Short Term 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 Short Term

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

The idea behind Cisco Systems and The Short Term Municipal 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.