Correlation Between Amphenol and Cisco Systems
Can any of the company-specific risk be diversified away by investing in both Amphenol 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 Amphenol and Cisco Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amphenol and Cisco Systems, you can compare the effects of market volatilities on Amphenol 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 Amphenol with a short position of Cisco Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amphenol and Cisco Systems.
Diversification Opportunities for Amphenol and Cisco Systems
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amphenol and Cisco is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Amphenol and Cisco Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisco Systems and Amphenol 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 Amphenol 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 Amphenol i.e., Amphenol and Cisco Systems go up and down completely randomly.
Pair Corralation between Amphenol and Cisco Systems
Considering the 90-day investment horizon Amphenol is expected to generate 1.15 times more return on investment than Cisco Systems. However, Amphenol is 1.15 times more volatile than Cisco Systems. It trades about 0.34 of its potential returns per unit of risk. Cisco Systems is currently generating about 0.01 per unit of risk. If you would invest 10,440 in Amphenol on February 20, 2024 and sell it today you would earn a total of 2,751 from holding Amphenol or generate 26.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.46% |
Values | Daily Returns |
Amphenol vs. Cisco Systems
Performance |
Timeline |
Amphenol |
Cisco Systems |
Amphenol and Cisco Systems Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Amphenol and Cisco Systems
The main advantage of trading using opposite Amphenol and Cisco Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amphenol 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 Amphenol 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.Cisco Systems vs. Nokia Corp ADR | Cisco Systems vs. Motorola Solutions | Cisco Systems vs. Ciena Corp | Cisco Systems vs. Telefonaktiebolaget LM Ericsson |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
Commodity Directory Find actively traded commodities issued by global exchanges | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |