Correlation Between Cisco Systems and 6 Meridian

Can any of the company-specific risk be diversified away by investing in both Cisco Systems and 6 Meridian 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 6 Meridian into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cisco Systems and 6 Meridian Small, you can compare the effects of market volatilities on Cisco Systems and 6 Meridian 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 6 Meridian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and 6 Meridian.

Diversification Opportunities for Cisco Systems and 6 Meridian

0.77

Correlation Coefficient

Cisco Systems  6 Meridian

Poor diversification

The 3 months correlation between Cisco and SIXS is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and 6 Meridian Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 6 Meridian Small 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 6 Meridian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 6 Meridian Small has no effect on the direction of Cisco Systems i.e., Cisco Systems and 6 Meridian go up and down completely randomly.

Pair Corralation between Cisco Systems and 6 Meridian

Given the investment horizon of 90 days Cisco Systems is expected to generate 1.01 times less return on investment than 6 Meridian. In addition to that, Cisco Systems is 1.34 times more volatile than 6 Meridian Small. It trades about 0.07 of its total potential returns per unit of risk. 6 Meridian Small is currently generating about 0.09 per unit of volatility. If you would invest  4,668  in 6 Meridian Small on May 20, 2025 and sell it today you would earn a total of  246.00  from holding 6 Meridian Small or generate 5.27% return on investment over 90 days.

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

Cisco Systems  vs.  6 Meridian Small

Cisco Systems

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Cisco Systems is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

6 Meridian Small

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in 6 Meridian Small are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, 6 Meridian is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cisco Systems and 6 Meridian

The main advantage of trading using opposite Cisco Systems and 6 Meridian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, 6 Meridian 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 6 Meridian will offset losses from the drop in 6 Meridian's long position.

The idea behind Cisco Systems and 6 Meridian Small 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.