Correlation Between Intel and Lowes Companies
Can any of the company-specific risk be diversified away by investing in both Intel and Lowes Companies 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 Lowes Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel and Lowes Companies, you can compare the effects of market volatilities on Intel and Lowes Companies 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 Lowes Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and Lowes Companies.
Diversification Opportunities for Intel and Lowes Companies
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Intel and Lowes is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Lowes Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowes Companies 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 Lowes Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowes Companies has no effect on the direction of Intel i.e., Intel and Lowes Companies go up and down completely randomly.
Pair Corralation between Intel and Lowes Companies
Assuming the 90 days trading horizon Intel is expected to generate 1.48 times more return on investment than Lowes Companies. However, Intel is 1.48 times more volatile than Lowes Companies. It trades about 0.18 of its potential returns per unit of risk. Lowes Companies is currently generating about 0.16 per unit of risk. If you would invest 2,036 in Intel on September 3, 2024 and sell it today you would earn a total of 216.00 from holding Intel or generate 10.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intel vs. Lowes Companies
Performance |
| Timeline |
| Intel |
| Lowes Companies |
Intel and Lowes Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intel and Lowes Companies
The main advantage of trading using opposite Intel and Lowes Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, Lowes Companies 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 Lowes Companies will offset losses from the drop in Lowes Companies' long position.| Intel vs. Altair Engineering | Intel vs. INTERCONT HOTELS | Intel vs. Playa Hotels Resorts | Intel vs. Corsair Gaming |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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