Correlation Between Media and Intel
Can any of the company-specific risk be diversified away by investing in both Media 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 Media and Intel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Media and Games and Intel, you can compare the effects of market volatilities on Media 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 Media with a short position of Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Media and Intel.
Diversification Opportunities for Media and Intel
Very weak diversification
The 3 months correlation between Media and Intel is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Media and Games and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and Media 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 Media and Games 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 Media i.e., Media and Intel go up and down completely randomly.
Pair Corralation between Media and Intel
Assuming the 90 days trading horizon Media and Games is expected to generate 1.22 times more return on investment than Intel. However, Media is 1.22 times more volatile than Intel. It trades about 0.14 of its potential returns per unit of risk. Intel is currently generating about -0.07 per unit of risk. If you would invest 98.00 in Media and Games on September 14, 2024 and sell it today you would earn a total of 231.00 from holding Media and Games or generate 235.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.64% |
| Values | Daily Returns |
Media and Games vs. Intel
Performance |
| Timeline |
| Media and Games |
| Intel |
Media and Intel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Media and Intel
The main advantage of trading using opposite Media and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Media 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.| Media vs. Superior Plus Corp | Media vs. SIVERS SEMICONDUCTORS AB | Media vs. Norsk Hydro ASA | Media vs. Reliance Steel Aluminum |
| Intel vs. JAPAN AIRLINES | Intel vs. PENN NATL GAMING | Intel vs. Media and Games | Intel vs. Southwest Airlines Co |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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