Correlation Between Intel and INTERNATIONAL

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

Diversification Opportunities for Intel and INTERNATIONAL

-0.65
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Intel and INTERNATIONAL is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Intel and INTERNATIONAL BUSINESS MACHS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERNATIONAL BUSINESS 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 INTERNATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERNATIONAL BUSINESS has no effect on the direction of Intel i.e., Intel and INTERNATIONAL go up and down completely randomly.

Pair Corralation between Intel and INTERNATIONAL

Given the investment horizon of 90 days Intel is expected to generate 2.77 times more return on investment than INTERNATIONAL. However, Intel is 2.77 times more volatile than INTERNATIONAL BUSINESS MACHS. It trades about 0.14 of its potential returns per unit of risk. INTERNATIONAL BUSINESS MACHS is currently generating about -0.17 per unit of risk. If you would invest  2,234  in Intel on August 25, 2024 and sell it today you would earn a total of  216.00  from holding Intel or generate 9.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Intel  vs.  INTERNATIONAL BUSINESS MACHS

 Performance 
       Timeline  
Intel 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Intel exhibited solid returns over the last few months and may actually be approaching a breakup point.
INTERNATIONAL BUSINESS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days INTERNATIONAL BUSINESS MACHS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for INTERNATIONAL BUSINESS MACHS investors.

Intel and INTERNATIONAL Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Intel and INTERNATIONAL

The main advantage of trading using opposite Intel and INTERNATIONAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, 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 INTERNATIONAL will offset losses from the drop in INTERNATIONAL's long position.
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The idea behind Intel and INTERNATIONAL BUSINESS MACHS 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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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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