Correlation Between Cisco Systems and Invesco QQQ
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Invesco QQQ 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 Invesco QQQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Invesco QQQ Trust, you can compare the effects of market volatilities on Cisco Systems and Invesco QQQ 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 Invesco QQQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Invesco QQQ.
Diversification Opportunities for Cisco Systems and Invesco QQQ
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cisco and Invesco is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Invesco QQQ Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco QQQ Trust 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 Invesco QQQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco QQQ Trust has no effect on the direction of Cisco Systems i.e., Cisco Systems and Invesco QQQ go up and down completely randomly.
Pair Corralation between Cisco Systems and Invesco QQQ
Given the investment horizon of 90 days Cisco Systems is expected to generate 1.41 times more return on investment than Invesco QQQ. However, Cisco Systems is 1.41 times more volatile than Invesco QQQ Trust. It trades about -0.08 of its potential returns per unit of risk. Invesco QQQ Trust is currently generating about -0.25 per unit of risk. If you would invest 4,915 in Cisco Systems on January 20, 2024 and sell it today you would lose (104.00) from holding Cisco Systems or give up 2.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Cisco Systems vs. Invesco QQQ Trust
Performance |
| Timeline |
| Cisco Systems |
| Invesco QQQ Trust |
Cisco Systems and Invesco QQQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Invesco QQQ
The main advantage of trading using opposite Cisco Systems and Invesco QQQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Invesco QQQ 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 Invesco QQQ will offset losses from the drop in Invesco QQQ's long position.| Cisco Systems vs. Juniper Networks | Cisco Systems vs. Nokia Corp ADR | Cisco Systems vs. Motorola Solutions | Cisco Systems vs. Ciena Corp |
| Invesco QQQ vs. SPDR SP 500 | Invesco QQQ vs. Vanguard SP 500 | Invesco QQQ vs. NVIDIA | Invesco QQQ vs. SPDR Dow Jones |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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