Correlation Between Lowes Companies and Intel
Can any of the company-specific risk be diversified away by investing in both Lowes Companies and Intel 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 Lowes Companies and Intel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lowes Companies and Intel, you can compare the effects of market volatilities on Lowes Companies and Intel 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 Lowes Companies with a short position of Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lowes Companies and Intel.
Diversification Opportunities for Lowes Companies and Intel
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lowes and Intel is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Lowes Companies and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and Lowes Companies 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 Lowes Companies are associated (or correlated) with Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of Lowes Companies i.e., Lowes Companies and Intel go up and down completely randomly.
Pair Corralation between Lowes Companies and Intel
Assuming the 90 days horizon Lowes Companies is expected to generate 1.69 times less return on investment than Intel. But when comparing it to its historical volatility, Lowes Companies is 1.48 times less risky than Intel. It trades about 0.16 of its potential returns per unit of risk. Intel is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,036 in Intel on September 3, 2024 and sell it today you would earn a total of 216.00 from holding Intel or generate 10.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lowes Companies vs. Intel
Performance |
| Timeline |
| Lowes Companies |
| Intel |
Lowes Companies and Intel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lowes Companies and Intel
The main advantage of trading using opposite Lowes Companies and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lowes Companies position performs unexpectedly, Intel 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 Intel will offset losses from the drop in Intel's long position.| Lowes Companies vs. BURLINGTON STORES | Lowes Companies vs. Chongqing Machinery Electric | Lowes Companies vs. Retail Estates NV | Lowes Companies vs. MARKET VECTR RETAIL |
| Intel vs. Altair Engineering | Intel vs. INTERCONT HOTELS | Intel vs. Playa Hotels Resorts | Intel vs. Corsair Gaming |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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