Correlation Between VMware and SSGA SPDR

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

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

Diversification Opportunities for VMware and SSGA SPDR

-0.43

Correlation Coefficient

VMware  SSGA SPDR

Very good diversification

The 3 months correlation between VMware and SSGA is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding VMware Inc and SSGA SPDR ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSGA SPDR ETFs 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 SSGA SPDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSGA SPDR ETFs has no effect on the direction of VMware i.e., VMware and SSGA SPDR go up and down completely randomly.

Pair Corralation between VMware and SSGA SPDR

If you would invest  3,079  in SSGA SPDR ETFs on January 25, 2024 and sell it today you would earn a total of  392.00  from holding SSGA SPDR ETFs or generate 12.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.14%
Values	Daily Returns

VMware Inc  vs.  SSGA SPDR ETFs

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.

SSGA SPDR ETFs

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SSGA SPDR ETFs are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SSGA SPDR is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with VMware and SSGA SPDR

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

The idea behind VMware Inc and SSGA SPDR ETFs 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.