Correlation Between Xtrackers California and VMware
Can any of the company-specific risk be diversified away by investing in both Xtrackers California and VMware 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 Xtrackers California and VMware into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers California Municipal and VMware Inc, you can compare the effects of market volatilities on Xtrackers California and VMware 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 Xtrackers California with a short position of VMware. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers California and VMware.
Diversification Opportunities for Xtrackers California and VMware
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and VMware is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers California Municipal and VMware Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VMware Inc and Xtrackers California 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 Xtrackers California Municipal are associated (or correlated) with VMware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VMware Inc has no effect on the direction of Xtrackers California i.e., Xtrackers California and VMware go up and down completely randomly.
Pair Corralation between Xtrackers California and VMware
Allowing for the 90-day total investment horizon Xtrackers California Municipal is expected to under-perform the VMware. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers California Municipal is 9.06 times less risky than VMware. The etf trades about -0.01 of its potential returns per unit of risk. The VMware Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 10,452 in VMware Inc on January 25, 2024 and sell it today you would earn a total of 3,796 from holding VMware Inc or generate 36.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 23.02% |
| Values | Daily Returns |
Xtrackers California Municipal vs. VMware Inc
Performance |
| Timeline |
| Xtrackers California |
| VMware Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Xtrackers California and VMware Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers California and VMware
The main advantage of trading using opposite Xtrackers California and VMware positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers California position performs unexpectedly, VMware 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 VMware will offset losses from the drop in VMware's long position.| Xtrackers California vs. Xtrackers Public Limited | Xtrackers California vs. Xtrackers MSCI EAFE | Xtrackers California vs. Xtrackers Emerging Markets |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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