Correlation Between Intel and DISCOVER

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Can any of the company-specific risk be diversified away by investing in both Intel and DISCOVER 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 DISCOVER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel and DISCOVER FINL SVCS, you can compare the effects of market volatilities on Intel and DISCOVER 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 DISCOVER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and DISCOVER.

Diversification Opportunities for Intel and DISCOVER

IntelDISCOVERDiversified AwayIntelDISCOVERDiversified Away100%
0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Intel and DISCOVER is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Intel and DISCOVER FINL SVCS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DISCOVER FINL SVCS 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 DISCOVER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DISCOVER FINL SVCS has no effect on the direction of Intel i.e., Intel and DISCOVER go up and down completely randomly.

Pair Corralation between Intel and DISCOVER

If you would invest  1,975  in Intel on November 30, 2024 and sell it today you would earn a total of  334.00  from holding Intel or generate 16.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy4.76%
ValuesDaily Returns

Intel  vs.  DISCOVER FINL SVCS

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-15-10-5051015
JavaScript chart by amCharts 3.21.15INTC 254709AL2
       Timeline  
Intel 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Intel is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb192021222324252627
DISCOVER FINL SVCS 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days DISCOVER FINL SVCS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DISCOVER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Intel and DISCOVER Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-11.69-8.75-5.82-2.890.012.895.838.7711.7 0.0050.0100.0150.0200.0250.030
JavaScript chart by amCharts 3.21.15INTC 254709AL2
       Returns  

Pair Trading with Intel and DISCOVER

The main advantage of trading using opposite Intel and DISCOVER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, DISCOVER 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 DISCOVER will offset losses from the drop in DISCOVER's long position.
The idea behind Intel and DISCOVER FINL SVCS 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.
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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