Correlation Between Intel and Paramount Resources
Can any of the company-specific risk be diversified away by investing in both Intel and Paramount Resources 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 Paramount Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel and Paramount Resources, you can compare the effects of market volatilities on Intel and Paramount Resources 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 Paramount Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and Paramount Resources.
Diversification Opportunities for Intel and Paramount Resources
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Intel and Paramount is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Paramount Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Resources 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 Paramount Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramount Resources has no effect on the direction of Intel i.e., Intel and Paramount Resources go up and down completely randomly.
Pair Corralation between Intel and Paramount Resources
Given the investment horizon of 90 days Intel is expected to generate 1.97 times more return on investment than Paramount Resources. However, Intel is 1.97 times more volatile than Paramount Resources. It trades about -0.03 of its potential returns per unit of risk. Paramount Resources is currently generating about -0.37 per unit of risk. If you would invest 1,987 in Intel on November 5, 2024 and sell it today you would lose (49.00) from holding Intel or give up 2.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intel vs. Paramount Resources
Performance |
| Timeline |
| Intel |
| Paramount Resources |
Intel and Paramount Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intel and Paramount Resources
The main advantage of trading using opposite Intel and Paramount Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, Paramount Resources 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 Paramount Resources will offset losses from the drop in Paramount Resources' long position.The idea behind Intel and Paramount Resources 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.| Paramount Resources vs. Gear Energy | Paramount Resources vs. Valeura Energy | Paramount Resources vs. Birchcliff Energy | Paramount Resources vs. Canacol Energy |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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