Correlation Between Cisco Systems and Valneva SE

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

Diversification Opportunities for Cisco Systems and Valneva SE

0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Cisco and Valneva is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Valneva SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valneva SE ADR 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 Valneva SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valneva SE ADR has no effect on the direction of Cisco Systems i.e., Cisco Systems and Valneva SE go up and down completely randomly.

Pair Corralation between Cisco Systems and Valneva SE

Given the investment horizon of 90 days Cisco Systems is expected to generate 2.45 times less return on investment than Valneva SE. But when comparing it to its historical volatility, Cisco Systems is 4.47 times less risky than Valneva SE. It trades about 0.23 of its potential returns per unit of risk. Valneva SE ADR is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  730.00  in Valneva SE ADR on December 30, 2023 and sell it today you would earn a total of  62.00  from holding Valneva SE ADR or generate 8.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Cisco Systems  vs.  Valneva SE ADR

 Performance 
       Timeline  
Cisco Systems 

Risk-Adjusted Performance

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High
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 very healthy fundamental indicators, Cisco Systems is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
Valneva SE ADR 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Valneva SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in April 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Cisco Systems and Valneva SE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cisco Systems and Valneva SE

The main advantage of trading using opposite Cisco Systems and Valneva SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Valneva SE 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 Valneva SE will offset losses from the drop in Valneva SE's long position.
The idea behind Cisco Systems and Valneva SE ADR 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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