Correlation Between Intel and Allegro Microsystems
Can any of the company-specific risk be diversified away by investing in both Intel and Allegro Microsystems 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 Allegro Microsystems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel and Allegro Microsystems, you can compare the effects of market volatilities on Intel and Allegro Microsystems 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 Allegro Microsystems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and Allegro Microsystems.
Diversification Opportunities for Intel and Allegro Microsystems
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Intel and Allegro is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Allegro Microsystems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegro Microsystems 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 Allegro Microsystems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegro Microsystems has no effect on the direction of Intel i.e., Intel and Allegro Microsystems go up and down completely randomly.
Pair Corralation between Intel and Allegro Microsystems
Given the investment horizon of 90 days Intel is expected to generate 1.01 times more return on investment than Allegro Microsystems. However, Intel is 1.01 times more volatile than Allegro Microsystems. It trades about 0.06 of its potential returns per unit of risk. Allegro Microsystems is currently generating about -0.12 per unit of risk. If you would invest 2,290 in Intel on August 30, 2024 and sell it today you would earn a total of 75.00 from holding Intel or generate 3.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intel vs. Allegro Microsystems
Performance |
| Timeline |
| Intel |
| Allegro Microsystems |
Intel and Allegro Microsystems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intel and Allegro Microsystems
The main advantage of trading using opposite Intel and Allegro Microsystems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, Allegro Microsystems 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 Allegro Microsystems will offset losses from the drop in Allegro Microsystems' long position.The idea behind Intel and Allegro Microsystems pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Allegro Microsystems vs. Synaptics Incorporated | Allegro Microsystems vs. Microchip Technology | Allegro Microsystems vs. Qorvo Inc | Allegro Microsystems vs. Monolithic Power Systems |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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