Correlation Between Cisco Systems and Hot Mamas

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Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Hot Mamas 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 Hot Mamas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Hot Mamas Foods, you can compare the effects of market volatilities on Cisco Systems and Hot Mamas 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 Hot Mamas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Hot Mamas.

Diversification Opportunities for Cisco Systems and Hot Mamas

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Cisco and Hot is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Hot Mamas Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hot Mamas Foods 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 Hot Mamas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hot Mamas Foods has no effect on the direction of Cisco Systems i.e., Cisco Systems and Hot Mamas go up and down completely randomly.

Pair Corralation between Cisco Systems and Hot Mamas

If you would invest  4,626  in Cisco Systems on January 26, 2024 and sell it today you would earn a total of  209.00  from holding Cisco Systems or generate 4.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Cisco Systems  vs.  Hot Mamas Foods

 Performance 
       Timeline  
Cisco Systems 

Risk-Adjusted Performance

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Weak
 
Strong
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.
Hot Mamas Foods 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hot Mamas Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Hot Mamas is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Cisco Systems and Hot Mamas Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cisco Systems and Hot Mamas

The main advantage of trading using opposite Cisco Systems and Hot Mamas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Hot Mamas 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 Hot Mamas will offset losses from the drop in Hot Mamas' long position.
The idea behind Cisco Systems and Hot Mamas Foods 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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