Correlation Between Intel and BZAM
Can any of the company-specific risk be diversified away by investing in both Intel and BZAM 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 BZAM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel and BZAM, you can compare the effects of market volatilities on Intel and BZAM 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 BZAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and BZAM.
Diversification Opportunities for Intel and BZAM
Pay attention - limited upside
The 3 months correlation between Intel and BZAM is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Intel and BZAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BZAM 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 BZAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BZAM has no effect on the direction of Intel i.e., Intel and BZAM go up and down completely randomly.
Pair Corralation between Intel and BZAM
Given the investment horizon of 90 days Intel is expected to under-perform the BZAM. But the stock apears to be less risky and, when comparing its historical volatility, Intel is 32.61 times less risky than BZAM. The stock trades about -0.02 of its potential returns per unit of risk. The BZAM is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 13.00 in BZAM on August 26, 2024 and sell it today you would lose (12.99) from holding BZAM or give up 99.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.7% |
| Values | Daily Returns |
Intel vs. BZAM
Performance |
| Timeline |
| Intel |
| BZAM |
Intel and BZAM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intel and BZAM
The main advantage of trading using opposite Intel and BZAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, BZAM 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 BZAM will offset losses from the drop in BZAM's long position.The idea behind Intel and BZAM 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.| BZAM vs. Udemy Inc | BZAM vs. Bright Scholar Education | BZAM vs. Evolution Mining | BZAM vs. WEBTOON Entertainment Common |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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