Correlation Between Workday and Cisco Systems

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

Diversification Opportunities for Workday and Cisco Systems

0.95
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Workday and Cisco is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Workday and Cisco Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisco Systems and Workday 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 Workday 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 Workday i.e., Workday and Cisco Systems go up and down completely randomly.

Pair Corralation between Workday and Cisco Systems

Given the investment horizon of 90 days Workday is expected to under-perform the Cisco Systems. In addition to that, Workday is 2.38 times more volatile than Cisco Systems. It trades about -0.12 of its total potential returns per unit of risk. Cisco Systems is currently generating about -0.2 per unit of volatility. If you would invest  4,516  in Cisco Systems on April 8, 2022 and sell it today you would lose (247.00)  from holding Cisco Systems or give up 5.47% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Workday  vs.  Cisco Systems

 Performance (%) 
      Timeline 
Workday 
Workday Performance
0 of 100
Over the last 90 days Workday has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in August 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Workday Price Channel

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 unsteady performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in August 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0362
Payout Ratio
0.45
Last Split Factor
2:1
Forward Annual Dividend Rate
1.52
Dividend Date
2022-07-27
Ex Dividend Date
2022-07-05
Last Split Date
2000-03-23

Cisco Price Channel

Workday and Cisco Systems Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Workday and Cisco Systems

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

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