Correlation Between Aqua America and Intel
Can any of the company-specific risk be diversified away by investing in both Aqua America and Intel 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 Aqua America and Intel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqua America and Intel, you can compare the effects of market volatilities on Aqua America and Intel 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 Aqua America with a short position of Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqua America and Intel.
Diversification Opportunities for Aqua America and Intel
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aqua and Intel is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Aqua America and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and Aqua America 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 Aqua America are associated (or correlated) with Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of Aqua America i.e., Aqua America and Intel go up and down completely randomly.
Pair Corralation between Aqua America and Intel
Assuming the 90 days horizon Aqua America is expected to generate 0.61 times more return on investment than Intel. However, Aqua America is 1.65 times less risky than Intel. It trades about 0.18 of its potential returns per unit of risk. Intel is currently generating about 0.08 per unit of risk. If you would invest 3,512 in Aqua America on September 2, 2024 and sell it today you would earn a total of 252.00 from holding Aqua America or generate 7.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqua America vs. Intel
Performance |
| Timeline |
| Aqua America |
| Intel |
Aqua America and Intel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqua America and Intel
The main advantage of trading using opposite Aqua America and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqua America position performs unexpectedly, Intel 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 Intel will offset losses from the drop in Intel's long position.| Aqua America vs. STMicroelectronics NV | Aqua America vs. Elmos Semiconductor SE | Aqua America vs. Arrow Electronics | Aqua America vs. Meiko Electronics Co |
| Intel vs. InterContinental Hotels Group | Intel vs. CITY OFFICE REIT | Intel vs. 24SEVENOFFICE GROUP AB | Intel vs. Summit Hotel Properties |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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