Correlation Between Cisco Systems and MIND CTI

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

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

Diversification Opportunities for Cisco Systems and MIND CTI

0.19

Correlation Coefficient

Cisco Systems MIND CTI

Average diversification

The 3 months correlation between Cisco and MIND is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and MIND CTI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MIND CTI 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 MIND CTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MIND CTI has no effect on the direction of Cisco Systems i.e., Cisco Systems and MIND CTI go up and down completely randomly.

Pair Corralation between Cisco Systems and MIND CTI

Given the investment horizon of 90 days Cisco Systems is expected to generate 0.84 times more return on investment than MIND CTI. However, Cisco Systems is 1.19 times less risky than MIND CTI. It trades about 0.03 of its potential returns per unit of risk. MIND CTI is currently generating about 0.01 per unit of risk. If you would invest  4,785  in Cisco Systems on March 6, 2023 and sell it today you would earn a total of  217.00  from holding Cisco Systems or generate 4.54% return on investment over 90 days.

Cisco Systems  vs.  MIND CTI

Cisco Systems

Cisco Performance

2 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Cisco Systems is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the insiders.

MIND CTI

MIND Performance

0 of 100

Over the last 90 days MIND CTI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, MIND CTI is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the insiders.

Pair Trading with Cisco Systems and MIND CTI

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

The idea behind Cisco Systems and MIND CTI 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.