Correlation Between Knowles Cor and Cisco Systems
Can any of the company-specific risk be diversified away by investing in both Knowles Cor 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 Knowles Cor and Cisco Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knowles Cor and Cisco Systems, you can compare the effects of market volatilities on Knowles Cor 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 Knowles Cor with a short position of Cisco Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knowles Cor and Cisco Systems.
Diversification Opportunities for Knowles Cor and Cisco Systems
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Knowles and Cisco is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Knowles Cor and Cisco Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisco Systems and Knowles Cor 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 Knowles Cor 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 Knowles Cor i.e., Knowles Cor and Cisco Systems go up and down completely randomly.
Pair Corralation between Knowles Cor and Cisco Systems
Allowing for the 90-day total investment horizon Knowles Cor is expected to generate 5.36 times less return on investment than Cisco Systems. In addition to that, Knowles Cor is 1.62 times more volatile than Cisco Systems. It trades about 0.01 of its total potential returns per unit of risk. Cisco Systems is currently generating about 0.05 per unit of volatility. If you would invest 4,822 in Cisco Systems on March 20, 2025 and sell it today you would earn a total of 1,760 from holding Cisco Systems or generate 36.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knowles Cor vs. Cisco Systems
Performance |
| Timeline |
| Knowles Cor |
| Cisco Systems |
Knowles Cor and Cisco Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knowles Cor and Cisco Systems
The main advantage of trading using opposite Knowles Cor and Cisco Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knowles Cor 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.| Knowles Cor vs. Comtech Telecommunications Corp | Knowles Cor vs. Ituran Location and | Knowles Cor vs. Aviat Networks | Knowles Cor vs. Extreme Networks |
| Cisco Systems vs. ADTRAN Inc | Cisco Systems vs. KVH Industries | Cisco Systems vs. Telesat Corp | Cisco Systems vs. Digi International |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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