Correlation Between Cisco Systems and WisdomTree Japan
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and WisdomTree Japan 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 WisdomTree Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and WisdomTree Japan Hedged, you can compare the effects of market volatilities on Cisco Systems and WisdomTree Japan 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 WisdomTree Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and WisdomTree Japan.
Diversification Opportunities for Cisco Systems and WisdomTree Japan
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cisco and WisdomTree is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and WisdomTree Japan Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Japan Hedged 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 WisdomTree Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Japan Hedged has no effect on the direction of Cisco Systems i.e., Cisco Systems and WisdomTree Japan go up and down completely randomly.
Pair Corralation between Cisco Systems and WisdomTree Japan
Given the investment horizon of 90 days Cisco Systems is expected to generate 0.95 times more return on investment than WisdomTree Japan. However, Cisco Systems is 1.05 times less risky than WisdomTree Japan. It trades about 0.07 of its potential returns per unit of risk. WisdomTree Japan Hedged is currently generating about 0.04 per unit of risk. If you would invest 6,006 in Cisco Systems on March 12, 2025 and sell it today you would earn a total of 509.00 from holding Cisco Systems or generate 8.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cisco Systems vs. WisdomTree Japan Hedged
Performance |
| Timeline |
| Cisco Systems |
| WisdomTree Japan Hedged |
Cisco Systems and WisdomTree Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and WisdomTree Japan
The main advantage of trading using opposite Cisco Systems and WisdomTree Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, WisdomTree Japan 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 WisdomTree Japan will offset losses from the drop in WisdomTree Japan's long position.| Cisco Systems vs. Juniper Networks | Cisco Systems vs. Nokia Corp ADR | Cisco Systems vs. Motorola Solutions | Cisco Systems vs. Ciena Corp |
| WisdomTree Japan vs. WisdomTree Europe Hedged | WisdomTree Japan vs. WisdomTree Japan SmallCap | WisdomTree Japan vs. WisdomTree Europe SmallCap | WisdomTree Japan vs. iShares MSCI Germany |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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