Correlation Between Cisco Systems and Minerals Technologies

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

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

Diversification Opportunities for Cisco Systems and Minerals Technologies

-0.68

Correlation Coefficient

Cisco Systems  Minerals Technologies

Excellent diversification

The 3 months correlation between Cisco and Minerals is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals Technologies 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 Minerals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerals Technologies has no effect on the direction of Cisco Systems i.e., Cisco Systems and Minerals Technologies go up and down completely randomly.

Pair Corralation between Cisco Systems and Minerals Technologies

Given the investment horizon of 90 days Cisco Systems is expected to generate 0.81 times more return on investment than Minerals Technologies. However, Cisco Systems is 1.23 times less risky than Minerals Technologies. It trades about 0.19 of its potential returns per unit of risk. Minerals Technologies is currently generating about -0.07 per unit of risk. If you would invest  6,648  in Cisco Systems on September 7, 2025 and sell it today you would earn a total of  1,149  from holding Cisco Systems or generate 17.28% return on investment over 90 days.

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

Cisco Systems  vs.  Minerals Technologies

Cisco Systems

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, Cisco Systems displayed solid returns over the last few months and may actually be approaching a breakup point.

Minerals Technologies

Risk-Adjusted Performance

Weakest

Over the last 90 days Minerals Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Cisco Systems and Minerals Technologies

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

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