Correlation Between Intel and Apple

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

By analyzing existing cross correlation between Intel and Apple Inc, you can compare the effects of market volatilities on Intel and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and Apple.

Diversification Opportunities for Intel and Apple

0.72

Correlation Coefficient

Intel  Apple

Poor diversification

The 3 months correlation between Intel and Apple is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Intel i.e., Intel and Apple go up and down completely randomly.

Pair Corralation between Intel and Apple

Assuming the 90 days horizon Intel is expected to generate 1.92 times more return on investment than Apple. However, Intel is 1.92 times more volatile than Apple Inc. It trades about 0.17 of its potential returns per unit of risk. Apple Inc is currently generating about 0.15 per unit of risk. If you would invest  1,754  in Intel on September 4, 2024 and sell it today you would earn a total of  512.00  from holding Intel or generate 29.19% return on investment over 90 days.

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

Intel  vs.  Apple Inc

Intel

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Intel reported solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Apple reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intel and Apple

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

The idea behind Intel and Apple Inc 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..