Correlation Between Intel and Magellan Midstream
Can any of the company-specific risk be diversified away by investing in both Intel and Magellan Midstream 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 Magellan Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel and Magellan Midstream Partners, you can compare the effects of market volatilities on Intel and Magellan Midstream 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 Magellan Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and Magellan Midstream.
Diversification Opportunities for Intel and Magellan Midstream
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Intel and Magellan is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Magellan Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Midstream 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 Magellan Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magellan Midstream has no effect on the direction of Intel i.e., Intel and Magellan Midstream go up and down completely randomly.
Pair Corralation between Intel and Magellan Midstream
Given the investment horizon of 90 days Intel is expected to under-perform the Magellan Midstream. In addition to that, Intel is 3.01 times more volatile than Magellan Midstream Partners. It trades about -0.01 of its total potential returns per unit of risk. Magellan Midstream Partners is currently generating about 0.2 per unit of volatility. If you would invest 6,158 in Magellan Midstream Partners on August 31, 2024 and sell it today you would earn a total of 393.00 from holding Magellan Midstream Partners or generate 6.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 8.56% |
| Values | Daily Returns |
Intel vs. Magellan Midstream Partners
Performance |
| Timeline |
| Intel |
| Magellan Midstream |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Intel and Magellan Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intel and Magellan Midstream
The main advantage of trading using opposite Intel and Magellan Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, Magellan Midstream 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 Magellan Midstream will offset losses from the drop in Magellan Midstream's long position.The idea behind Intel and Magellan Midstream Partners 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.| Magellan Midstream vs. Kinder Morgan | Magellan Midstream vs. Enterprise Products Partners | Magellan Midstream vs. Williams Companies | Magellan Midstream vs. MPLX LP |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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