Correlation Between VMware and Nexera Energy

Can any of the company-specific risk be diversified away by investing in both VMware and Nexera Energy 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 Nexera Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VMware Inc and Nexera Energy, you can compare the effects of market volatilities on VMware and Nexera Energy 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 Nexera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of VMware and Nexera Energy.

Diversification Opportunities for VMware and Nexera Energy

0.69

Correlation Coefficient

VMware  Nexera Energy

Poor diversification

The 3 months correlation between VMware and Nexera is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding VMware Inc and Nexera Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexera Energy 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 Nexera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexera Energy has no effect on the direction of VMware i.e., VMware and Nexera Energy go up and down completely randomly.

Pair Corralation between VMware and Nexera Energy

If you would invest  0.36  in Nexera Energy on January 24, 2024 and sell it today you would earn a total of  0.00  from holding Nexera Energy or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	5.0%
Values	Daily Returns

VMware Inc  vs.  Nexera Energy

VMware Inc

Risk-Adjusted Performance

0 of 100

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 current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Nexera Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nexera Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with VMware and Nexera Energy

The main advantage of trading using opposite VMware and Nexera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VMware position performs unexpectedly, Nexera Energy 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 Nexera Energy will offset losses from the drop in Nexera Energy's long position.

The idea behind VMware Inc and Nexera Energy 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.