Correlation Between VMware and Gan Shmuel

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

Diversification Opportunities for VMware and Gan Shmuel

-0.88
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between VMware and Gan is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding VMware Inc and Gan Shmuel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gan Shmuel 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 Gan Shmuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gan Shmuel has no effect on the direction of VMware i.e., VMware and Gan Shmuel go up and down completely randomly.

Pair Corralation between VMware and Gan Shmuel

If you would invest  184,000  in Gan Shmuel on December 30, 2023 and sell it today you would earn a total of  3,800  from holding Gan Shmuel or generate 2.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy5.56%
ValuesDaily Returns

VMware Inc  vs.  Gan Shmuel

 Performance 
       Timeline  
VMware Inc 

Risk-Adjusted Performance

0 of 100

 
Low
 
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 recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Gan Shmuel 

Risk-Adjusted Performance

17 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Gan Shmuel are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gan Shmuel sustained solid returns over the last few months and may actually be approaching a breakup point.

VMware and Gan Shmuel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with VMware and Gan Shmuel

The main advantage of trading using opposite VMware and Gan Shmuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VMware position performs unexpectedly, Gan Shmuel 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 Gan Shmuel will offset losses from the drop in Gan Shmuel's long position.
The idea behind VMware Inc and Gan Shmuel 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.
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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