Correlation Between Intel and Photronics
Can any of the company-specific risk be diversified away by investing in both Intel and Photronics 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 Photronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel and Photronics, you can compare the effects of market volatilities on Intel and Photronics 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 Photronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and Photronics.
Diversification Opportunities for Intel and Photronics
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Intel and Photronics is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Photronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photronics 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 Photronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Photronics has no effect on the direction of Intel i.e., Intel and Photronics go up and down completely randomly.
Pair Corralation between Intel and Photronics
Given the investment horizon of 90 days Intel is expected to under-perform the Photronics. In addition to that, Intel is 1.47 times more volatile than Photronics. It trades about -0.03 of its total potential returns per unit of risk. Photronics is currently generating about -0.02 per unit of volatility. If you would invest 2,729 in Photronics on August 24, 2024 and sell it today you would lose (285.00) from holding Photronics or give up 10.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intel vs. Photronics
Performance |
| Timeline |
| Intel |
| Photronics |
Intel and Photronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intel and Photronics
The main advantage of trading using opposite Intel and Photronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, Photronics 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 Photronics will offset losses from the drop in Photronics' long position.| Intel vs. NVIDIA | Intel vs. Taiwan Semiconductor Manufacturing | Intel vs. Marvell Technology Group | Intel vs. Micron Technology |
| Photronics vs. Aehr Test Systems | Photronics vs. Lam Research Corp | Photronics vs. KLA Tencor | Photronics vs. Kulicke and Soffa |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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