Correlation Between Intel and Western Magnesium
Can any of the company-specific risk be diversified away by investing in both Intel and Western Magnesium 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 Western Magnesium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel and Western Magnesium, you can compare the effects of market volatilities on Intel and Western Magnesium 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 Western Magnesium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and Western Magnesium.
Diversification Opportunities for Intel and Western Magnesium
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Intel and Western is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Western Magnesium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Magnesium 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 Western Magnesium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Magnesium has no effect on the direction of Intel i.e., Intel and Western Magnesium go up and down completely randomly.
Pair Corralation between Intel and Western Magnesium
Given the investment horizon of 90 days Intel is expected to generate 0.42 times more return on investment than Western Magnesium. However, Intel is 2.38 times less risky than Western Magnesium. It trades about -0.03 of its potential returns per unit of risk. Western Magnesium is currently generating about -0.09 per unit of risk. If you would invest 2,984 in Intel on September 2, 2024 and sell it today you would lose (579.00) from holding Intel or give up 19.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Intel vs. Western Magnesium
Performance |
| Timeline |
| Intel |
| Western Magnesium |
Intel and Western Magnesium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intel and Western Magnesium
The main advantage of trading using opposite Intel and Western Magnesium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, Western Magnesium 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 Western Magnesium will offset losses from the drop in Western Magnesium's long position.| Intel vs. NXP Semiconductors NV | Intel vs. GSI Technology | Intel vs. MaxLinear | Intel vs. Texas Instruments Incorporated |
| Western Magnesium vs. ATT Inc | Western Magnesium vs. Merck Company | Western Magnesium vs. Walt Disney | Western Magnesium vs. Caterpillar |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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