Correlation Between Intel and Sherritt International
Can any of the company-specific risk be diversified away by investing in both Intel and Sherritt International 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 Sherritt International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel and Sherritt International, you can compare the effects of market volatilities on Intel and Sherritt International 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 Sherritt International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and Sherritt International.
Diversification Opportunities for Intel and Sherritt International
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Intel and Sherritt is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Sherritt International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sherritt International 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 Sherritt International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sherritt International has no effect on the direction of Intel i.e., Intel and Sherritt International go up and down completely randomly.
Pair Corralation between Intel and Sherritt International
Given the investment horizon of 90 days Intel is expected to generate 0.92 times more return on investment than Sherritt International. However, Intel is 1.08 times less risky than Sherritt International. It trades about 0.12 of its potential returns per unit of risk. Sherritt International is currently generating about -0.16 per unit of risk. If you would invest 2,268 in Intel on August 26, 2024 and sell it today you would earn a total of 182.00 from holding Intel or generate 8.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intel vs. Sherritt International
Performance |
| Timeline |
| Intel |
| Sherritt International |
Intel and Sherritt International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intel and Sherritt International
The main advantage of trading using opposite Intel and Sherritt International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, Sherritt International 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 Sherritt International will offset losses from the drop in Sherritt International's long position.The idea behind Intel and Sherritt International 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.| Sherritt International vs. Ascendant Resources | Sherritt International vs. Cantex Mine Development | Sherritt International vs. Amarc Resources | Sherritt International vs. Sterling Metals Corp |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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