Correlation Between Cisco Systems and Impinj

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

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

Diversification Opportunities for Cisco Systems and Impinj

-0.67

Correlation Coefficient

Cisco Systems  Impinj

Excellent diversification

The 3 months correlation between Cisco and Impinj is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Impinj Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impinj Inc 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 Impinj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impinj Inc has no effect on the direction of Cisco Systems i.e., Cisco Systems and Impinj go up and down completely randomly.

Pair Corralation between Cisco Systems and Impinj

Given the investment horizon of 90 days Cisco Systems is expected to generate 0.41 times more return on investment than Impinj. However, Cisco Systems is 2.43 times less risky than Impinj. It trades about -0.13 of its potential returns per unit of risk. Impinj Inc is currently generating about -0.1 per unit of risk. If you would invest  4,800  in Cisco Systems on March 9, 2024 and sell it today you would lose (177.00) from holding Cisco Systems or give up 3.69% of portfolio value over 90 days.

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

Cisco Systems  vs.  Impinj Inc

Cisco Systems

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Impinj Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Impinj Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Impinj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cisco Systems and Impinj

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

The idea behind Cisco Systems and Impinj Inc 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.