Correlation Between VMware and Loral Space

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

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

Diversification Opportunities for VMware and Loral Space

0.0

Correlation Coefficient

VMware  Loral Space

Pay attention - limited upside

The 3 months correlation between VMware and Loral is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding VMware Inc and Loral Space Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loral Space Communic 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 Loral Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loral Space Communic has no effect on the direction of VMware i.e., VMware and Loral Space go up and down completely randomly.

Pair Corralation between VMware and Loral Space

If you would invest  0.00  in Loral Space Communications on January 20, 2024 and sell it today you would earn a total of  0.00  from holding Loral Space Communications or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

VMware Inc  vs.  Loral Space Communications

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.

Loral Space Communic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Loral Space Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Loral Space is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with VMware and Loral Space

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

The idea behind VMware Inc and Loral Space Communications 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.