Correlation Between VMware and State Street
Can any of the company-specific risk be diversified away by investing in both VMware and State Street 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 State Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VMware Inc and State Street Emerging, you can compare the effects of market volatilities on VMware and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of VMware and State Street.
Diversification Opportunities for VMware and State Street
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between VMware and State is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding VMware Inc and State Street Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Emerging 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Emerging has no effect on the direction of VMware i.e., VMware and State Street go up and down completely randomly.
Pair Corralation between VMware and State Street
Considering the 90-day investment horizon VMware Inc is expected to generate 2.17 times more return on investment than State Street. However, VMware is 2.17 times more volatile than State Street Emerging. It trades about 0.09 of its potential returns per unit of risk. State Street Emerging is currently generating about 0.03 per unit of risk. If you would invest 11,009 in VMware Inc on January 25, 2024 and sell it today you would earn a total of 3,239 from holding VMware Inc or generate 29.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 64.36% |
| Values | Daily Returns |
VMware Inc vs. State Street Emerging
Performance |
| Timeline |
| VMware Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| State Street Emerging |
VMware and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VMware and State Street
The main advantage of trading using opposite VMware and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VMware position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.The idea behind VMware Inc and State Street Emerging 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.| State Street vs. State Street Target | State Street vs. State Street Target | State Street vs. Ssga International Stock | State Street vs. State Street Aggregate |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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