Correlation Between VMware and Fednat Holding

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

Diversification Opportunities for VMware and Fednat Holding

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between VMware and Fednat is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding VMware Inc and Fednat Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fednat Holding and VMware 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 VMware Inc are associated (or correlated) with Fednat Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fednat Holding has no effect on the direction of VMware i.e., VMware and Fednat Holding go up and down completely randomly.

Pair Corralation between VMware and Fednat Holding

If you would invest  0.16  in Fednat Holding Co on December 29, 2023 and sell it today you would earn a total of  0.00  from holding Fednat Holding Co or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy1.69%
ValuesDaily Returns

VMware Inc  vs.  Fednat Holding Co

 Performance 
       Timeline  
VMware Inc 

Risk-Adjusted Performance

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High
Very Weak
Over the last 90 days VMware Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable primary indicators, VMware is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Fednat Holding 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Fednat Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Fednat Holding is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

VMware and Fednat Holding Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with VMware and Fednat Holding

The main advantage of trading using opposite VMware and Fednat Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VMware position performs unexpectedly, Fednat Holding 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 Fednat Holding will offset losses from the drop in Fednat Holding's long position.
The idea behind VMware Inc and Fednat Holding Co 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.
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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