Correlation Between Intel and Australian Agricultural
Can any of the company-specific risk be diversified away by investing in both Intel and Australian Agricultural 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 Intel and Australian Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel and Australian Agricultural, you can compare the effects of market volatilities on Intel and Australian Agricultural 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 Intel with a short position of Australian Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and Australian Agricultural.
Diversification Opportunities for Intel and Australian Agricultural
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Intel and Australian is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Australian Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agricultural and Intel 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 Intel are associated (or correlated) with Australian Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Agricultural has no effect on the direction of Intel i.e., Intel and Australian Agricultural go up and down completely randomly.
Pair Corralation between Intel and Australian Agricultural
Assuming the 90 days trading horizon Intel is expected to generate 2.54 times more return on investment than Australian Agricultural. However, Intel is 2.54 times more volatile than Australian Agricultural. It trades about 0.24 of its potential returns per unit of risk. Australian Agricultural is currently generating about -0.14 per unit of risk. If you would invest 1,895 in Intel on October 23, 2024 and sell it today you would earn a total of 211.00 from holding Intel or generate 11.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
Intel vs. Australian Agricultural
Performance |
| Timeline |
| Intel |
| Australian Agricultural |
Intel and Australian Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intel and Australian Agricultural
The main advantage of trading using opposite Intel and Australian Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, Australian Agricultural 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 Australian Agricultural will offset losses from the drop in Australian Agricultural's long position.| Intel vs. INDO RAMA SYNTHETIC | Intel vs. Scottish Mortgage Investment | Intel vs. Silicon Motion Technology | Intel vs. Sekisui Chemical Co |
| Australian Agricultural vs. American Airlines Group | Australian Agricultural vs. Addtech AB | Australian Agricultural vs. United Airlines Holdings | Australian Agricultural vs. Kingdee International Software |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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