Correlation Between Intel and Sitime
Can any of the company-specific risk be diversified away by investing in both Intel and Sitime 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 Sitime into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel and Sitime, you can compare the effects of market volatilities on Intel and Sitime 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 Sitime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and Sitime.
Diversification Opportunities for Intel and Sitime
Almost no diversification
The 3 months correlation between Intel and Sitime is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Sitime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sitime 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 Sitime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sitime has no effect on the direction of Intel i.e., Intel and Sitime go up and down completely randomly.
Pair Corralation between Intel and Sitime
Given the investment horizon of 90 days Intel is expected to under-perform the Sitime. But the stock apears to be less risky and, when comparing its historical volatility, Intel is 1.25 times less risky than Sitime. The stock trades about -0.07 of its potential returns per unit of risk. The Sitime is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 9,250 in Sitime on August 27, 2024 and sell it today you would earn a total of 11,858 from holding Sitime or generate 128.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intel vs. Sitime
Performance |
| Timeline |
| Intel |
| Sitime |
Intel and Sitime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intel and Sitime
The main advantage of trading using opposite Intel and Sitime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, Sitime 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 Sitime will offset losses from the drop in Sitime's long position.The idea behind Intel and Sitime 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.| Sitime vs. Lattice Semiconductor | Sitime vs. Qorvo Inc | Sitime vs. Microchip Technology | Sitime vs. Silicon Laboratories |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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