Correlation Between Workday and VMware
Can any of the company-specific risk be diversified away by investing in both Workday and VMware 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 Workday and VMware into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Workday and VMware Inc, you can compare the effects of market volatilities on Workday and VMware 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 Workday with a short position of VMware. Check out your portfolio center. Please also check ongoing floating volatility patterns of Workday and VMware.
Diversification Opportunities for Workday and VMware
Very weak diversification
The 3 months correlation between Workday and VMware is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Workday and VMware Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VMware Inc and Workday 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 Workday are associated (or correlated) with VMware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VMware Inc has no effect on the direction of Workday i.e., Workday and VMware go up and down completely randomly.
Pair Corralation between Workday and VMware
Given the investment horizon of 90 days Workday is expected to generate 0.99 times more return on investment than VMware. However, Workday is 1.01 times less risky than VMware. It trades about 0.08 of its potential returns per unit of risk. VMware Inc is currently generating about 0.05 per unit of risk. If you would invest 18,634 in Workday on January 26, 2024 and sell it today you would earn a total of 6,940 from holding Workday or generate 37.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 58.06% |
| Values | Daily Returns |
Workday vs. VMware Inc
Performance |
| Timeline |
| Workday |
| VMware Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Workday and VMware Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Workday and VMware
The main advantage of trading using opposite Workday and VMware positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workday position performs unexpectedly, VMware 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 VMware will offset losses from the drop in VMware's long position.| Workday vs. Intuit Inc | Workday vs. Zoom Video Communications | Workday vs. ServiceNow | Workday vs. Snowflake |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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