Correlation Between Cisco Systems and Innovator Small

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

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

Diversification Opportunities for Cisco Systems and Innovator Small

0.0

Correlation Coefficient

Cisco Systems  Innovator Small

Pay attention - limited upside

The 3 months correlation between Cisco and Innovator is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Innovator Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Small 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 Innovator Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Small Cap has no effect on the direction of Cisco Systems i.e., Cisco Systems and Innovator Small go up and down completely randomly.

Pair Corralation between Cisco Systems and Innovator Small

If you would invest  4,726  in Cisco Systems on February 5, 2025 and sell it today you would earn a total of  1,206  from holding Cisco Systems or generate 25.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Cisco Systems  vs.  Innovator Small Cap

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.

Innovator Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Innovator Small Cap has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Innovator Small is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Cisco Systems and Innovator Small

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

The idea behind Cisco Systems and Innovator Small Cap 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..