Correlation Between Optimum Fixed and Cisco Systems

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

Diversification Opportunities for Optimum Fixed and Cisco Systems

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between Optimum and Cisco is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Optimum Fixed Income and Cisco Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisco Systems and Optimum Fixed 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 Optimum Fixed Income 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 Optimum Fixed i.e., Optimum Fixed and Cisco Systems go up and down completely randomly.

Pair Corralation between Optimum Fixed and Cisco Systems

Assuming the 90 days horizon Optimum Fixed Income is expected to under-perform the Cisco Systems. But the mutual fund apears to be less risky and, when comparing its historical volatility, Optimum Fixed Income is 3.14 times less risky than Cisco Systems. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Cisco Systems is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,424  in Cisco Systems on August 29, 2022 and sell it today you would earn a total of  416.00  from holding Cisco Systems or generate 9.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Optimum Fixed Income  vs.  Cisco Systems

 Performance (%) 
       Timeline  
Optimum Fixed Income 
Optimum Performance
0 of 100
Over the last 90 days Optimum Fixed Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Optimum Fixed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Optimum Price Channel

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 unsteady fundamental indicators, Cisco Systems may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Cisco Price Channel

Optimum Fixed and Cisco Systems Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Optimum Fixed and Cisco Systems

The main advantage of trading using opposite Optimum Fixed and Cisco Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optimum Fixed 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.
Optimum Fixed vs. Pimco Total Return
The idea behind Optimum Fixed Income 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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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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