Correlation Between Cisco Systems and Formidable Fortress

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

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

Diversification Opportunities for Cisco Systems and Formidable Fortress

0.93

Correlation Coefficient

Cisco Systems  Formidable Fortress

Almost no diversification

The 3 months correlation between Cisco and Formidable is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Formidable Fortress ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formidable Fortress ETF 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 Formidable Fortress. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formidable Fortress ETF has no effect on the direction of Cisco Systems i.e., Cisco Systems and Formidable Fortress go up and down completely randomly.

Pair Corralation between Cisco Systems and Formidable Fortress

Given the investment horizon of 90 days Cisco Systems is expected to generate 1.46 times more return on investment than Formidable Fortress. However, Cisco Systems is 1.46 times more volatile than Formidable Fortress ETF. It trades about 0.33 of its potential returns per unit of risk. Formidable Fortress ETF is currently generating about 0.25 per unit of risk. If you would invest  5,405  in Cisco Systems on April 21, 2025 and sell it today you would earn a total of  1,400  from holding Cisco Systems or generate 25.9% 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.  Formidable Fortress ETF

Cisco Systems

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Cisco Systems displayed solid returns over the last few months and may actually be approaching a breakup point.

Formidable Fortress ETF

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Formidable Fortress ETF are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Formidable Fortress may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Cisco Systems and Formidable Fortress

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

The idea behind Cisco Systems and Formidable Fortress ETF 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.