Correlation Between Intel and Carrier Global

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

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

Diversification Opportunities for Intel and Carrier Global

0.24

Correlation Coefficient

Intel  Carrier Global

Modest diversification

The 3 months correlation between Intel and Carrier is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Carrier Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carrier Global 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 Carrier Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carrier Global has no effect on the direction of Intel i.e., Intel and Carrier Global go up and down completely randomly.

Pair Corralation between Intel and Carrier Global

Assuming the 90 days trading horizon Intel is expected to under-perform the Carrier Global. In addition to that, Intel is 1.69 times more volatile than Carrier Global. It trades about -0.28 of its total potential returns per unit of risk. Carrier Global is currently generating about -0.2 per unit of volatility. If you would invest  7,025  in Carrier Global on September 22, 2024 and sell it today you would lose (620.00) from holding Carrier Global or give up 8.83% of portfolio value over 90 days.

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

Intel  vs.  Carrier Global

Intel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Carrier Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carrier Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Intel and Carrier Global

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

The idea behind Intel and Carrier Global 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.