Correlation Between VMware and ImagineAR

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

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

Diversification Opportunities for VMware and ImagineAR

-0.54

Correlation Coefficient

VMware  ImagineAR

Excellent diversification

The 3 months correlation between VMware and ImagineAR is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding VMware Inc and ImagineAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ImagineAR 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 ImagineAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ImagineAR has no effect on the direction of VMware i.e., VMware and ImagineAR go up and down completely randomly.

Pair Corralation between VMware and ImagineAR

If you would invest  5.54  in ImagineAR on September 30, 2024 and sell it today you would lose (1.04) from holding ImagineAR or give up 18.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

VMware Inc  vs.  ImagineAR

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

ImagineAR

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ImagineAR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, ImagineAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VMware and ImagineAR

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

The idea behind VMware Inc and ImagineAR 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.