Correlation Between Cisco Systems and Vanguard Mid

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

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

Diversification Opportunities for Cisco Systems and Vanguard Mid

0.96

Correlation Coefficient

Cisco Systems  Vanguard Mid

Almost no diversification

The 3 months correlation between Cisco and Vanguard is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Vanguard Mid Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Mid Cap 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 Vanguard Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Mid Cap has no effect on the direction of Cisco Systems i.e., Cisco Systems and Vanguard Mid go up and down completely randomly.

Pair Corralation between Cisco Systems and Vanguard Mid

Given the investment horizon of 90 days Cisco Systems is expected to generate 1.03 times less return on investment than Vanguard Mid. In addition to that, Cisco Systems is 1.19 times more volatile than Vanguard Mid Cap Growth. It trades about 0.33 of its total potential returns per unit of risk. Vanguard Mid Cap Growth is currently generating about 0.41 per unit of volatility. If you would invest  22,746  in Vanguard Mid Cap Growth on April 20, 2025 and sell it today you would earn a total of  6,150  from holding Vanguard Mid Cap Growth or generate 27.04% 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.  Vanguard Mid Cap Growth

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 unfluctuating fundamental indicators, Cisco Systems displayed solid returns over the last few months and may actually be approaching a breakup point.

Vanguard Mid Cap

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Mid Cap Growth are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Vanguard Mid unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cisco Systems and Vanguard Mid

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

The idea behind Cisco Systems and Vanguard Mid Cap Growth 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.