Correlation Between Cisco Systems and SPDR SSGA

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

By analyzing existing cross correlation between Cisco Systems and SPDR SSGA My2026, you can compare the effects of market volatilities on Cisco Systems and SPDR SSGA 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 SPDR SSGA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and SPDR SSGA.

Diversification Opportunities for Cisco Systems and SPDR SSGA

0.92

Correlation Coefficient

Cisco Systems  SPDR SSGA

Almost no diversification

The 3 months correlation between Cisco and SPDR is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and SPDR SSGA My2026 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSGA My2026 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 SPDR SSGA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSGA My2026 has no effect on the direction of Cisco Systems i.e., Cisco Systems and SPDR SSGA go up and down completely randomly.

Pair Corralation between Cisco Systems and SPDR SSGA

Given the investment horizon of 90 days Cisco Systems is expected to generate 18.04 times more return on investment than SPDR SSGA. However, Cisco Systems is 18.04 times more volatile than SPDR SSGA My2026. It trades about 0.22 of its potential returns per unit of risk. SPDR SSGA My2026 is currently generating about 0.33 per unit of risk. If you would invest  6,130  in Cisco Systems on May 12, 2025 and sell it today you would earn a total of  1,049  from holding Cisco Systems or generate 17.11% 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.  SPDR SSGA My2026

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.

SPDR SSGA My2026

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SSGA My2026 are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, SPDR SSGA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cisco Systems and SPDR SSGA

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

The idea behind Cisco Systems and SPDR SSGA My2026 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.