Correlation Between Intel and Exxon
Can any of the company-specific risk be diversified away by investing in both Intel and Exxon 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 Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel and Exxon Mobil Corp, you can compare the effects of market volatilities on Intel and Exxon 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 Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and Exxon.
Diversification Opportunities for Intel and Exxon
Poor diversification
The 3 months correlation between Intel and Exxon is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Exxon Mobil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil Corp 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 Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil Corp has no effect on the direction of Intel i.e., Intel and Exxon go up and down completely randomly.
Pair Corralation between Intel and Exxon
Given the investment horizon of 90 days Intel is expected to generate 2.61 times more return on investment than Exxon. However, Intel is 2.61 times more volatile than Exxon Mobil Corp. It trades about 0.07 of its potential returns per unit of risk. Exxon Mobil Corp is currently generating about 0.15 per unit of risk. If you would invest 2,320 in Intel on September 2, 2024 and sell it today you would earn a total of 85.00 from holding Intel or generate 3.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intel vs. Exxon Mobil Corp
Performance |
| Timeline |
| Intel |
| Exxon Mobil Corp |
Intel and Exxon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intel and Exxon
The main advantage of trading using opposite Intel and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, Exxon 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 Exxon will offset losses from the drop in Exxon's long position.| Intel vs. NXP Semiconductors NV | Intel vs. GSI Technology | Intel vs. MaxLinear | Intel vs. Texas Instruments Incorporated |
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 CEOs Directory module to screen CEOs from public companies around the world.
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