Correlation Between Cisco Systems and First Trust

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and First Trust 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 First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and First Trust NASDAQ, you can compare the effects of market volatilities on Cisco Systems and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and First Trust.

Diversification Opportunities for Cisco Systems and First Trust

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between Cisco and First is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and First Trust NASDAQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust NASDAQ 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust NASDAQ has no effect on the direction of Cisco Systems i.e., Cisco Systems and First Trust go up and down completely randomly.

Pair Corralation between Cisco Systems and First Trust

Given the investment horizon of 90 days Cisco Systems is expected to generate 1.17 times more return on investment than First Trust. However, Cisco Systems is 1.17 times more volatile than First Trust NASDAQ. It trades about 0.24 of its potential returns per unit of risk. First Trust NASDAQ is currently generating about -0.11 per unit of risk. If you would invest  4,455  in Cisco Systems on September 8, 2022 and sell it today you would earn a total of  404.00  from holding Cisco Systems or generate 9.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Cisco Systems  vs.  First Trust NASDAQ

 Performance (%) 
       Timeline  
Cisco Systems 
Cisco Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental indicators, Cisco Systems may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Cisco Price Channel

First Trust NASDAQ 
First Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in First Trust NASDAQ are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, First Trust is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Price Channel

Cisco Systems and First Trust Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cisco Systems and First Trust

The main advantage of trading using opposite Cisco Systems and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.
Cisco Systems vs. ATT Inc
Cisco Systems vs. Dupont De Nemours
Cisco Systems vs. The Boeing
Cisco Systems vs. General Electric
The idea behind Cisco Systems and First Trust NASDAQ 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.
First Trust vs. Intel
First Trust vs. Fidelity MSCI Energy
First Trust vs. Bondbloxx ETF Trust
First Trust vs. Merck Company
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

Other Complementary Tools

Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Go
Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Go
CEO Directory
Screen CEOs from public companies around the world
Go
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators
Go
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Go
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Go