Correlation Between Roper Technologies, and Cisco Systems

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

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

Diversification Opportunities for Roper Technologies, and Cisco Systems

0.38

Correlation Coefficient

Roper Technologies,  Cisco Systems

Weak diversification

The 3 months correlation between Roper and Cisco is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Roper Technologies, and Cisco Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisco Systems and Roper Technologies, 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 Roper Technologies, are associated (or correlated) with Cisco Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cisco Systems has no effect on the direction of Roper Technologies, i.e., Roper Technologies, and Cisco Systems go up and down completely randomly.

Pair Corralation between Roper Technologies, and Cisco Systems

Assuming the 90 days trading horizon Roper Technologies, is expected to generate 219.8 times less return on investment than Cisco Systems. But when comparing it to its historical volatility, Roper Technologies, is 146.33 times less risky than Cisco Systems. It trades about 0.12 of its potential returns per unit of risk. Cisco Systems is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  6,243  in Cisco Systems on April 22, 2025 and sell it today you would earn a total of  1,365  from holding Cisco Systems or generate 21.86% return on investment over 90 days.

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

Roper Technologies,  vs.  Cisco Systems

Roper Technologies,

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Roper Technologies, are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Roper Technologies, is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Cisco Systems

Risk-Adjusted Performance

Good

Over the last 90 days Cisco Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak fundamental indicators, Cisco Systems sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Roper Technologies, and Cisco Systems

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

The idea behind Roper Technologies, and Cisco Systems 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..