Correlation Between Jack In and Cisco Systems

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

By analyzing existing cross correlation between Jack In The and Cisco Systems, you can compare the effects of market volatilities on Jack In 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 Jack In with a short position of Cisco Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jack In and Cisco Systems.

Diversification Opportunities for Jack In and Cisco Systems

0.53

Correlation Coefficient

Jack In  Cisco Systems

Very weak diversification

The 3 months correlation between Jack and Cisco is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Jack In The and Cisco Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisco Systems and Jack In 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 Jack In The 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 Jack In i.e., Jack In and Cisco Systems go up and down completely randomly.

Pair Corralation between Jack In and Cisco Systems

Given the investment horizon of 90 days Jack In The is expected to under-perform the Cisco Systems. In addition to that, Jack In is 1.74 times more volatile than Cisco Systems. It trades about -0.22 of its total potential returns per unit of risk. Cisco Systems is currently generating about -0.1 per unit of volatility. If you would invest  5,191  in Cisco Systems on January 25, 2024 and sell it today you would lose (359.00) from holding Cisco Systems or give up 6.92% of portfolio value over 90 days.

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

Jack In The  vs.  Cisco Systems

Jack In

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jack In The has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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 unfluctuating 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.

Pair Trading with Jack In and Cisco Systems

The main advantage of trading using opposite Jack In and Cisco Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jack In 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.

The idea behind Jack In The and Cisco Systems 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.