Correlation Between Cisco Systems and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Emerging Markets 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 Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Emerging Markets Equity, you can compare the effects of market volatilities on Cisco Systems and Emerging Markets 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 Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Emerging Markets.
Diversification Opportunities for Cisco Systems and Emerging Markets
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cisco and Emerging is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Emerging Markets Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Equity 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 Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Equity has no effect on the direction of Cisco Systems i.e., Cisco Systems and Emerging Markets go up and down completely randomly.
Pair Corralation between Cisco Systems and Emerging Markets
Given the investment horizon of 90 days Cisco Systems is expected to generate 1.57 times more return on investment than Emerging Markets. However, Cisco Systems is 1.57 times more volatile than Emerging Markets Equity. It trades about 0.31 of its potential returns per unit of risk. Emerging Markets Equity is currently generating about 0.31 per unit of risk. If you would invest 5,530 in Cisco Systems on April 23, 2025 and sell it today you would earn a total of 1,304 from holding Cisco Systems or generate 23.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cisco Systems vs. Emerging Markets Equity
Performance |
| Timeline |
| Cisco Systems |
| Emerging Markets Equity |
Cisco Systems and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Emerging Markets
The main advantage of trading using opposite Cisco Systems and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Cisco Systems vs. Nokia Corp ADR | Cisco Systems vs. Motorola Solutions | Cisco Systems vs. Ciena Corp | Cisco Systems vs. Telefonaktiebolaget LM Ericsson |
| Emerging Markets vs. Seafarer Overseas Growth | Emerging Markets vs. Fidelity Series Emerging | Emerging Markets vs. Doubleline Emerging Markets | Emerging Markets vs. Oberweis Emerging Growth |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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