Correlation Between VMware and Splitit Payments

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

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

Diversification Opportunities for VMware and Splitit Payments

-0.36

Correlation Coefficient

VMware  Splitit Payments

Very good diversification

The 3 months correlation between VMware and Splitit is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding VMware Inc and Splitit Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Splitit Payments 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 Splitit Payments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Splitit Payments has no effect on the direction of VMware i.e., VMware and Splitit Payments go up and down completely randomly.

Pair Corralation between VMware and Splitit Payments

If you would invest  16,043  in VMware Inc on September 17, 2024 and sell it today you would earn a total of  0.00  from holding VMware Inc or generate 0.0% return on investment over 90 days.

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

VMware Inc  vs.  Splitit Payments

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.

Splitit Payments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Splitit Payments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with VMware and Splitit Payments

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

The idea behind VMware Inc and Splitit Payments 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.