Correlation Between Intel and Southwestern Energy
Can any of the company-specific risk be diversified away by investing in both Intel and Southwestern Energy 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 Southwestern Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel and Southwestern Energy, you can compare the effects of market volatilities on Intel and Southwestern Energy 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 Southwestern Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and Southwestern Energy.
Diversification Opportunities for Intel and Southwestern Energy
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Intel and Southwestern is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Southwestern Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwestern Energy 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 Southwestern Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southwestern Energy has no effect on the direction of Intel i.e., Intel and Southwestern Energy go up and down completely randomly.
Pair Corralation between Intel and Southwestern Energy
Given the investment horizon of 90 days Intel is expected to under-perform the Southwestern Energy. In addition to that, Intel is 1.6 times more volatile than Southwestern Energy. It trades about -0.01 of its total potential returns per unit of risk. Southwestern Energy is currently generating about 0.06 per unit of volatility. If you would invest 532.00 in Southwestern Energy on August 31, 2024 and sell it today you would earn a total of 179.00 from holding Southwestern Energy or generate 33.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 88.5% |
| Values | Daily Returns |
Intel vs. Southwestern Energy
Performance |
| Timeline |
| Intel |
| Southwestern Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Strong
Intel and Southwestern Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intel and Southwestern Energy
The main advantage of trading using opposite Intel and Southwestern Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, Southwestern Energy 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 Southwestern Energy will offset losses from the drop in Southwestern Energy's long position.The idea behind Intel and Southwestern Energy 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.| Southwestern Energy vs. Antero Resources Corp | Southwestern Energy vs. EQT Corporation | Southwestern Energy vs. Matador Resources | Southwestern Energy vs. Range Resources 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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