Correlation Between Cisco Systems and Cirrus Logic
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Cirrus Logic 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 Cirrus Logic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Cirrus Logic, you can compare the effects of market volatilities on Cisco Systems and Cirrus Logic 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 Cirrus Logic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Cirrus Logic.
Diversification Opportunities for Cisco Systems and Cirrus Logic
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cisco and Cirrus is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Cirrus Logic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cirrus Logic 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 Cirrus Logic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cirrus Logic has no effect on the direction of Cisco Systems i.e., Cisco Systems and Cirrus Logic go up and down completely randomly.
Pair Corralation between Cisco Systems and Cirrus Logic
Given the investment horizon of 90 days Cisco Systems is expected to generate 0.65 times more return on investment than Cirrus Logic. However, Cisco Systems is 1.54 times less risky than Cirrus Logic. It trades about 0.27 of its potential returns per unit of risk. Cirrus Logic is currently generating about 0.17 per unit of risk. If you would invest 5,543 in Cisco Systems on April 17, 2025 and sell it today you would earn a total of 1,175 from holding Cisco Systems or generate 21.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cisco Systems vs. Cirrus Logic
Performance |
| Timeline |
| Cisco Systems |
| Cirrus Logic |
Cisco Systems and Cirrus Logic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Cirrus Logic
The main advantage of trading using opposite Cisco Systems and Cirrus Logic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Cirrus Logic 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 Cirrus Logic will offset losses from the drop in Cirrus Logic's long position.| Cisco Systems vs. Fabrinet | Cisco Systems vs. Kimball Electronics | Cisco Systems vs. Knowles Cor | Cisco Systems vs. Ubiquiti Networks |
| Cirrus Logic vs. Skyworks Solutions | Cirrus Logic vs. Qorvo Inc | Cirrus Logic vs. Analog Devices | Cirrus Logic vs. Lattice Semiconductor |
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 the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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