Correlation Between Cisco Systems and Sprott Physical

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

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

Diversification Opportunities for Cisco Systems and Sprott Physical

0.89

Correlation Coefficient

Cisco Systems  Sprott Physical

Very poor diversification

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

Pair Corralation between Cisco Systems and Sprott Physical

Given the investment horizon of 90 days Cisco Systems is expected to generate 1.84 times less return on investment than Sprott Physical. But when comparing it to its historical volatility, Cisco Systems is 1.7 times less risky than Sprott Physical. It trades about 0.25 of its potential returns per unit of risk. Sprott Physical Platinum is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  941.00  in Sprott Physical Platinum on April 30, 2025 and sell it today you would earn a total of  338.00  from holding Sprott Physical Platinum or generate 35.92% 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.  Sprott Physical Platinum

Cisco Systems

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 19 (%) 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.

Sprott Physical Platinum

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Platinum are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Sprott Physical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cisco Systems and Sprott Physical

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

The idea behind Cisco Systems and Sprott Physical Platinum 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.