Correlation Between Cisco Systems and Twitter

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

Diversification Opportunities for Cisco Systems and Twitter

0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Cisco and Twitter is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Twitter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Twitter 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 Twitter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Twitter has no effect on the direction of Cisco Systems i.e., Cisco Systems and Twitter go up and down completely randomly.

Pair Corralation between Cisco Systems and Twitter

Given the investment horizon of 90 days Cisco Systems is expected to generate 0.48 times more return on investment than Twitter. However, Cisco Systems is 2.1 times less risky than Twitter. It trades about 0.02 of its potential returns per unit of risk. Twitter is currently generating about 0.01 per unit of risk. If you would invest  3,667  in Cisco Systems on June 27, 2022 and sell it today you would earn a total of  399.00  from holding Cisco Systems or generate 10.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Cisco Systems  vs.  Twitter

 Performance (%) 
       Timeline  
Cisco Systems 
Cisco Performance
0 of 100
Over the last 90 days Cisco Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Cisco Systems is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Cisco Price Channel

Twitter 
Twitter Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Twitter are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Twitter may actually be approaching a critical reversion point that can send shares even higher in October 2022.

Twitter Price Channel

Cisco Systems and Twitter Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cisco Systems and Twitter

The main advantage of trading using opposite Cisco Systems and Twitter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Twitter 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 Twitter will offset losses from the drop in Twitter's long position.
Cisco Systems vs. Industrias Bachoco SA
The idea behind Cisco Systems and Twitter 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.
Twitter vs. Industrias Bachoco SA
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

Other Complementary Tools

Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Go
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Go
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Go
Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Go
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Go