Correlation Between VMware and Sterling Check
Can any of the company-specific risk be diversified away by investing in both VMware and Sterling Check 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 Sterling Check into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VMware Inc and Sterling Check Corp, you can compare the effects of market volatilities on VMware and Sterling Check 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 Sterling Check. Check out your portfolio center. Please also check ongoing floating volatility patterns of VMware and Sterling Check.
Diversification Opportunities for VMware and Sterling Check
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VMware and Sterling is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding VMware Inc and Sterling Check Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Check Corp 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 Sterling Check. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Check Corp has no effect on the direction of VMware i.e., VMware and Sterling Check go up and down completely randomly.
Pair Corralation between VMware and Sterling Check
Considering the 90-day investment horizon VMware Inc is expected to generate 0.64 times more return on investment than Sterling Check. However, VMware Inc is 1.56 times less risky than Sterling Check. It trades about 0.14 of its potential returns per unit of risk. Sterling Check Corp is currently generating about 0.03 per unit of risk. If you would invest 12,334 in VMware Inc on October 23, 2024 and sell it today you would earn a total of 3,709 from holding VMware Inc or generate 30.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 27.21% |
| Values | Daily Returns |
VMware Inc vs. Sterling Check Corp
Performance |
| Timeline |
| VMware Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Sterling Check Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
VMware and Sterling Check Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VMware and Sterling Check
The main advantage of trading using opposite VMware and Sterling Check positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VMware position performs unexpectedly, Sterling Check 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 Sterling Check will offset losses from the drop in Sterling Check's long position.The idea behind VMware Inc and Sterling Check Corp 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.| Sterling Check vs. EverCommerce | Sterling Check vs. Evertec | Sterling Check vs. Consensus Cloud Solutions | Sterling Check vs. CSG Systems International |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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