Correlation Between Cisco Systems and Visa

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

Diversification Opportunities for Cisco Systems and Visa

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between Cisco and Visa is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Visa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Inc 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 Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Inc has no effect on the direction of Cisco Systems i.e., Cisco Systems and Visa go up and down completely randomly.

Pair Corralation between Cisco Systems and Visa

Given the investment horizon of 90 days Cisco Systems is expected to generate 0.92 times more return on investment than Visa. However, Cisco Systems is 1.09 times less risky than Visa. It trades about 0.34 of its potential returns per unit of risk. Visa Inc is currently generating about 0.16 per unit of risk. If you would invest  4,260  in Cisco Systems on May 18, 2022 and sell it today you would earn a total of  399.00  from holding Cisco Systems or generate 9.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Cisco Systems  vs.  Visa Inc

 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 new stock price mess, may contribute to short-term losses for the institutional investors.

Cisco Price Channel

Visa Inc 
Visa Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Visa Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly sluggish basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Visa Price Channel

Cisco Systems and Visa Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cisco Systems and Visa

The main advantage of trading using opposite Cisco Systems and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Visa 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 Visa will offset losses from the drop in Visa's long position.

Cisco Systems

Pair trading matchups for Cisco Systems

The idea behind Cisco Systems and Visa Inc 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

Other Complementary Tools

Commodity Channel Index
Use Commodity Channel Index to analyze current equity momentum
Go
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go
Global Correlations
Find global opportunities by holding instruments from different markets
Go
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Go
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go