Correlation Between Intel and National Beverage
Can any of the company-specific risk be diversified away by investing in both Intel and National Beverage 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 National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel and National Beverage Corp, you can compare the effects of market volatilities on Intel and National Beverage 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 National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and National Beverage.
Diversification Opportunities for Intel and National Beverage
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Intel and National is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Intel and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp 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 National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of Intel i.e., Intel and National Beverage go up and down completely randomly.
Pair Corralation between Intel and National Beverage
Assuming the 90 days trading horizon Intel is expected to under-perform the National Beverage. In addition to that, Intel is 1.85 times more volatile than National Beverage Corp. It trades about -0.06 of its total potential returns per unit of risk. National Beverage Corp is currently generating about 0.05 per unit of volatility. If you would invest 4,116 in National Beverage Corp on September 12, 2024 and sell it today you would earn a total of 424.00 from holding National Beverage Corp or generate 10.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Intel vs. National Beverage Corp
Performance |
| Timeline |
| Intel |
| National Beverage Corp |
Intel and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intel and National Beverage
The main advantage of trading using opposite Intel and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, National Beverage 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 National Beverage will offset losses from the drop in National Beverage's long position.| Intel vs. National Beverage Corp | Intel vs. Neinor Homes SA | Intel vs. Corporate Office Properties | Intel vs. Focus Home Interactive |
| National Beverage vs. Superior Plus Corp | National Beverage vs. SIVERS SEMICONDUCTORS AB | National Beverage vs. NorAm Drilling AS | National Beverage vs. Norsk Hydro ASA |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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