Correlation Between Intel and Allied Energy
Can any of the company-specific risk be diversified away by investing in both Intel and Allied Energy 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 Allied Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel and Allied Energy, you can compare the effects of market volatilities on Intel and Allied Energy 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 Allied Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and Allied Energy.
Diversification Opportunities for Intel and Allied Energy
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Intel and Allied is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Allied Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Energy 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 Allied Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Energy has no effect on the direction of Intel i.e., Intel and Allied Energy go up and down completely randomly.
Pair Corralation between Intel and Allied Energy
Given the investment horizon of 90 days Intel is expected to under-perform the Allied Energy. But the stock apears to be less risky and, when comparing its historical volatility, Intel is 6.39 times less risky than Allied Energy. The stock trades about -0.07 of its potential returns per unit of risk. The Allied Energy is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 0.40 in Allied Energy on September 1, 2024 and sell it today you would earn a total of 0.89 from holding Allied Energy or generate 222.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Intel vs. Allied Energy
Performance |
| Timeline |
| Intel |
| Allied Energy |
Intel and Allied Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intel and Allied Energy
The main advantage of trading using opposite Intel and Allied Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, Allied Energy 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 Allied Energy will offset losses from the drop in Allied Energy's long position.| Intel vs. NXP Semiconductors NV | Intel vs. GSI Technology | Intel vs. MaxLinear | Intel vs. Texas Instruments Incorporated |
| Allied Energy vs. American Leisure Holdings | Allied Energy vs. Supurva Healthcare Group | Allied Energy vs. China Health Management | Allied Energy vs. Embrace Change Acquisition |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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