Correlation Between Impinj and Cisco Systems

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

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

Diversification Opportunities for Impinj and Cisco Systems

-0.3

Correlation Coefficient

Impinj  Cisco Systems

Very good diversification

The 3 months correlation between Impinj and Cisco is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Impinj Inc and Cisco Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisco Systems and Impinj 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 Impinj Inc 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 Impinj i.e., Impinj and Cisco Systems go up and down completely randomly.

Pair Corralation between Impinj and Cisco Systems

Allowing for the 90-day total investment horizon Impinj Inc is expected to generate 2.81 times more return on investment than Cisco Systems. However, Impinj is 2.81 times more volatile than Cisco Systems. It trades about 0.07 of its potential returns per unit of risk. Cisco Systems is currently generating about 0.01 per unit of risk. If you would invest  4,930  in Impinj Inc on January 25, 2024 and sell it today you would earn a total of  7,438  from holding Impinj Inc or generate 150.87% return on investment over 90 days.

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

Impinj Inc  vs.  Cisco Systems

Impinj Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Impinj Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, Impinj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 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.

Pair Trading with Impinj and Cisco Systems

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

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 Stocks Directory module to find actively traded stocks across global markets.