Correlation Between Vmware and Bar Harbor

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Can any of the company-specific risk be diversified away by investing in both Vmware and Bar Harbor 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 Bar Harbor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vmware Inc and Bar Harbor Bankshares, you can compare the effects of market volatilities on Vmware and Bar Harbor 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 Bar Harbor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vmware and Bar Harbor.

Diversification Opportunities for Vmware and Bar Harbor

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between Vmware and Bar Harbor is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Vmware Inc and Bar Harbor Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bar Harbor Bankshares 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 Bar Harbor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bar Harbor Bankshares has no effect on the direction of Vmware i.e., Vmware and Bar Harbor go up and down completely randomly.

Pair Corralation between Vmware and Bar Harbor

Considering the 90-day investment horizon Vmware is expected to generate 1.26 times less return on investment than Bar Harbor. But when comparing it to its historical volatility, Vmware Inc is 1.4 times less risky than Bar Harbor. It trades about 0.43 of its potential returns per unit of risk. Bar Harbor Bankshares is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  2,666  in Bar Harbor Bankshares on May 18, 2022 and sell it today you would earn a total of  359.00  from holding Bar Harbor Bankshares or generate 13.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Vmware Inc  vs.  Bar Harbor Bankshares

 Performance (%) 
       Timeline  
Vmware Inc 
Vmware Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Vmware Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady primary indicators, Vmware showed solid returns over the last few months and may actually be approaching a breakup point.

Vmware Price Channel

Bar Harbor Bankshares 
Bar Harbor Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bar Harbor Bankshares are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, Bar Harbor sustained solid returns over the last few months and may actually be approaching a breakup point.

Bar Harbor Price Channel

Vmware and Bar Harbor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vmware and Bar Harbor

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

Bar Harbor Bankshares

Pair trading matchups for Bar Harbor

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 ETF Directory module to find actively traded Exchange Traded Funds (ETF) from around the world.

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