Correlation Between Bentley SystemsInc and Cisco Systems
Can any of the company-specific risk be diversified away by investing in both Bentley SystemsInc 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 Bentley SystemsInc and Cisco Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bentley SystemsInc and Cisco Systems, you can compare the effects of market volatilities on Bentley SystemsInc 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 Bentley SystemsInc with a short position of Cisco Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bentley SystemsInc and Cisco Systems.
Diversification Opportunities for Bentley SystemsInc and Cisco Systems
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bentley and Cisco is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Bentley SystemsInc and Cisco Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisco Systems and Bentley SystemsInc 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 Bentley SystemsInc 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 Bentley SystemsInc i.e., Bentley SystemsInc and Cisco Systems go up and down completely randomly.
Pair Corralation between Bentley SystemsInc and Cisco Systems
Considering the 90-day investment horizon Bentley SystemsInc is expected to generate 2.05 times more return on investment than Cisco Systems. However, Bentley SystemsInc is 2.05 times more volatile than Cisco Systems. It trades about 0.1 of its potential returns per unit of risk. Cisco Systems is currently generating about -0.04 per unit of risk. If you would invest 4,960 in Bentley SystemsInc on February 13, 2024 and sell it today you would earn a total of 588.00 from holding Bentley SystemsInc or generate 11.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Bentley SystemsInc vs. Cisco Systems
Performance |
Timeline |
Bentley SystemsInc |
Cisco Systems |
Bentley SystemsInc and Cisco Systems Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bentley SystemsInc and Cisco Systems
The main advantage of trading using opposite Bentley SystemsInc and Cisco Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bentley SystemsInc 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.Bentley SystemsInc vs. Appfolio | Bentley SystemsInc vs. Workiva | Bentley SystemsInc vs. Alarm Holdings | Bentley SystemsInc vs. nCino Inc |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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