Correlation Between VMware and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both VMware and IShares MSCI 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 IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VMware Inc and iShares MSCI EAFE, you can compare the effects of market volatilities on VMware and IShares MSCI 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 IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of VMware and IShares MSCI.
Diversification Opportunities for VMware and IShares MSCI
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between VMware and IShares is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding VMware Inc and iShares MSCI EAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI EAFE 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI EAFE has no effect on the direction of VMware i.e., VMware and IShares MSCI go up and down completely randomly.
Pair Corralation between VMware and IShares MSCI
Considering the 90-day investment horizon VMware Inc is expected to generate 2.24 times more return on investment than IShares MSCI. However, VMware is 2.24 times more volatile than iShares MSCI EAFE. It trades about 0.04 of its potential returns per unit of risk. iShares MSCI EAFE is currently generating about 0.04 per unit of risk. If you would invest 13,380 in VMware Inc on January 25, 2024 and sell it today you would earn a total of 868.00 from holding VMware Inc or generate 6.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 54.39% |
| Values | Daily Returns |
VMware Inc vs. iShares MSCI EAFE
Performance |
| Timeline |
| VMware Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| iShares MSCI EAFE |
VMware and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VMware and IShares MSCI
The main advantage of trading using opposite VMware and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VMware position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.The idea behind VMware Inc and iShares MSCI EAFE 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.| IShares MSCI vs. Vanguard FTSE All World | IShares MSCI vs. iShares MSCI Intl | IShares MSCI vs. Dimensional ETF Trust | IShares MSCI vs. iShares Currency Hedged |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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