Correlation Between Intel and Health Care
Can any of the company-specific risk be diversified away by investing in both Intel and Health Care 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 Health Care into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel and Health Care Select, you can compare the effects of market volatilities on Intel and Health Care 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 Health Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and Health Care.
Diversification Opportunities for Intel and Health Care
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Intel and Health is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Health Care Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Care Select 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 Health Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Care Select has no effect on the direction of Intel i.e., Intel and Health Care go up and down completely randomly.
Pair Corralation between Intel and Health Care
Given the investment horizon of 90 days Intel is expected to under-perform the Health Care. In addition to that, Intel is 3.36 times more volatile than Health Care Select. It trades about -0.07 of its total potential returns per unit of risk. Health Care Select is currently generating about 0.01 per unit of volatility. If you would invest 14,707 in Health Care Select on November 1, 2024 and sell it today you would earn a total of 27.00 from holding Health Care Select or generate 0.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intel vs. Health Care Select
Performance |
| Timeline |
| Intel |
| Health Care Select |
Intel and Health Care Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intel and Health Care
The main advantage of trading using opposite Intel and Health Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, Health Care 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 Health Care will offset losses from the drop in Health Care's long position.| Intel vs. Diodes Incorporated | Intel vs. Daqo New Energy | Intel vs. Micron Technology | Intel vs. MagnaChip Semiconductor |
| Health Care vs. Consumer Staples Select | Health Care vs. Industrial Select Sector | Health Care vs. Consumer Discretionary Select | Health Care vs. Utilities Select Sector |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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