Correlation Between VMware and Victory Supermarket
Can any of the company-specific risk be diversified away by investing in both VMware and Victory Supermarket 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 Victory Supermarket into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VMware Inc and Victory Supermarket Chain, you can compare the effects of market volatilities on VMware and Victory Supermarket 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 Victory Supermarket. Check out your portfolio center. Please also check ongoing floating volatility patterns of VMware and Victory Supermarket.
Diversification Opportunities for VMware and Victory Supermarket
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between VMware and Victory is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding VMware Inc and Victory Supermarket Chain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Supermarket Chain 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 Victory Supermarket. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Supermarket Chain has no effect on the direction of VMware i.e., VMware and Victory Supermarket go up and down completely randomly.
Pair Corralation between VMware and Victory Supermarket
Considering the 90-day investment horizon VMware Inc is expected to generate 1.0 times more return on investment than Victory Supermarket. However, VMware is 1.0 times more volatile than Victory Supermarket Chain. It trades about 0.04 of its potential returns per unit of risk. Victory Supermarket Chain is currently generating about 0.01 per unit of risk. If you would invest 10,985 in VMware Inc on January 24, 2024 and sell it today you would earn a total of 3,263 from holding VMware Inc or generate 29.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.49% |
| Values | Daily Returns |
VMware Inc vs. Victory Supermarket Chain
Performance |
| Timeline |
| VMware Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Victory Supermarket Chain |
VMware and Victory Supermarket Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VMware and Victory Supermarket
The main advantage of trading using opposite VMware and Victory Supermarket positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VMware position performs unexpectedly, Victory Supermarket 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 Victory Supermarket will offset losses from the drop in Victory Supermarket's long position.The idea behind VMware Inc and Victory Supermarket Chain 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.| Victory Supermarket vs. Shufersal | Victory Supermarket vs. Rami Levi | Victory Supermarket vs. M Yochananof and | Victory Supermarket vs. Strauss Group |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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