Correlation Between VMware and Meta Platforms
Can any of the company-specific risk be diversified away by investing in both VMware and Meta Platforms 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 Meta Platforms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VMware Inc and Meta Platforms, you can compare the effects of market volatilities on VMware and Meta Platforms 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 Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of VMware and Meta Platforms.
Diversification Opportunities for VMware and Meta Platforms
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between VMware and Meta is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding VMware Inc and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms 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 Meta Platforms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Platforms has no effect on the direction of VMware i.e., VMware and Meta Platforms go up and down completely randomly.
Pair Corralation between VMware and Meta Platforms
If you would invest 14,404 in VMware Inc on December 29, 2023 and sell it today you would lose (156.00) from holding VMware Inc or give up 1.08% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 0.99% |
Values | Daily Returns |
VMware Inc vs. Meta Platforms
Performance |
Timeline |
VMware Inc |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Meta Platforms |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
VMware and Meta Platforms Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with VMware and Meta Platforms
The main advantage of trading using opposite VMware and Meta Platforms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VMware position performs unexpectedly, Meta Platforms 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 Meta Platforms will offset losses from the drop in Meta Platforms' long position.VMware vs. United Parks Resorts | VMware vs. Sonos Inc | VMware vs. Turning Point Brands | VMware vs. Philip Morris International |
Meta Platforms vs. Jacobs Solutions | Meta Platforms vs. ATRenew Inc DRC | Meta Platforms vs. Radcom | Meta Platforms vs. Arrow Electronics |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Global Correlations Find global opportunities by holding instruments from different markets |