Correlation Between Renaissance Europe and Intel

Can any of the company-specific risk be diversified away by investing in both Renaissance Europe 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 Renaissance Europe and Intel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Renaissance Europe C and Intel, you can compare the effects of market volatilities on Renaissance Europe 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 Renaissance Europe with a short position of Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Renaissance Europe and Intel.

Diversification Opportunities for Renaissance Europe and Intel

-0.57

Correlation Coefficient

Renaissance Europe  Intel

Excellent diversification

The 3 months correlation between Renaissance and Intel is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Renaissance Europe C and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and Renaissance Europe 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 Renaissance Europe C 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 Renaissance Europe i.e., Renaissance Europe and Intel go up and down completely randomly.

Pair Corralation between Renaissance Europe and Intel

Assuming the 90 days trading horizon Renaissance Europe C is expected to under-perform the Intel. But the fund apears to be less risky and, when comparing its historical volatility, Renaissance Europe C is 3.62 times less risky than Intel. The fund trades about -0.02 of its potential returns per unit of risk. The Intel is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,785  in Intel on September 12, 2024 and sell it today you would earn a total of  120.00  from holding Intel or generate 6.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Renaissance Europe C  vs.  Intel

Renaissance Europe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Renaissance Europe C has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Renaissance Europe is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Intel

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Intel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Renaissance Europe and Intel

The main advantage of trading using opposite Renaissance Europe and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Renaissance Europe 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.

The idea behind Renaissance Europe C and Intel 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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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..