Correlation Between Cisco Systems and Wabmsx

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

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

Diversification Opportunities for Cisco Systems and Wabmsx

0.89

Correlation Coefficient

Cisco Systems  Wabmsx

Very poor diversification

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

Pair Corralation between Cisco Systems and Wabmsx

Given the investment horizon of 90 days Cisco Systems is expected to generate 1.39 times less return on investment than Wabmsx. In addition to that, Cisco Systems is 1.25 times more volatile than Wabmsx. It trades about 0.17 of its total potential returns per unit of risk. Wabmsx is currently generating about 0.3 per unit of volatility. If you would invest  1,423  in Wabmsx on February 6, 2025 and sell it today you would earn a total of  176.00  from holding Wabmsx or generate 12.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Cisco Systems  vs.  Wabmsx

Cisco Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cisco Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Cisco Systems is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Wabmsx

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wabmsx has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Wabmsx is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cisco Systems and Wabmsx

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

The idea behind Cisco Systems and Wabmsx 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.