Correlation Between Corning Incorporated and Dell Technologies

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

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

Diversification Opportunities for Corning Incorporated and Dell Technologies

0.87

Correlation Coefficient

Corning Incorporated  Dell Technologies

Very poor diversification

The 3 months correlation between Corning and Dell is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Corning Incorporated and Dell Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dell Technologies and Corning Incorporated 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 Corning Incorporated are associated (or correlated) with Dell Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dell Technologies has no effect on the direction of Corning Incorporated i.e., Corning Incorporated and Dell Technologies go up and down completely randomly.

Pair Corralation between Corning Incorporated and Dell Technologies

Considering the 90-day investment horizon Corning Incorporated is expected to generate 0.47 times more return on investment than Dell Technologies. However, Corning Incorporated is 2.12 times less risky than Dell Technologies. It trades about 0.22 of its potential returns per unit of risk. Dell Technologies is currently generating about 0.09 per unit of risk. If you would invest  4,043  in Corning Incorporated on September 1, 2024 and sell it today you would earn a total of  824.00  from holding Corning Incorporated or generate 20.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Corning Incorporated  vs.  Dell Technologies

Corning Incorporated

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Corning Incorporated are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Corning Incorporated showed solid returns over the last few months and may actually be approaching a breakup point.

Dell Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dell Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent essential indicators, Dell Technologies disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Corning Incorporated and Dell Technologies

The main advantage of trading using opposite Corning Incorporated and Dell Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corning Incorporated position performs unexpectedly, Dell Technologies 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 Dell Technologies will offset losses from the drop in Dell Technologies' long position.

The idea behind Corning Incorporated and Dell Technologies 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.