Correlation Between VMware and FTAI Infrastructure
Can any of the company-specific risk be diversified away by investing in both VMware and FTAI Infrastructure 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 FTAI Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VMware Inc and FTAI Infrastructure, you can compare the effects of market volatilities on VMware and FTAI Infrastructure 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 FTAI Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of VMware and FTAI Infrastructure.
Diversification Opportunities for VMware and FTAI Infrastructure
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between VMware and FTAI is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding VMware Inc and FTAI Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAI Infrastructure 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 FTAI Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTAI Infrastructure has no effect on the direction of VMware i.e., VMware and FTAI Infrastructure go up and down completely randomly.
Pair Corralation between VMware and FTAI Infrastructure
If you would invest 613.00 in FTAI Infrastructure on January 20, 2024 and sell it today you would earn a total of 44.00 from holding FTAI Infrastructure or generate 7.18% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 4.55% |
Values | Daily Returns |
VMware Inc vs. FTAI Infrastructure
Performance |
Timeline |
VMware Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
FTAI Infrastructure |
VMware and FTAI Infrastructure Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with VMware and FTAI Infrastructure
The main advantage of trading using opposite VMware and FTAI Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VMware position performs unexpectedly, FTAI Infrastructure 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 FTAI Infrastructure will offset losses from the drop in FTAI Infrastructure's long position.The idea behind VMware Inc and FTAI Infrastructure 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.FTAI Infrastructure vs. Alliance Recovery | FTAI Infrastructure vs. Agro Capital Management | FTAI Infrastructure vs. Ayala | FTAI Infrastructure vs. Alliance Global 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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