Correlation Between Intel and Pacer Financial

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

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

Diversification Opportunities for Intel and Pacer Financial

-0.46

Correlation Coefficient

Intel  Pacer Financial

Very good diversification

The 3 months correlation between Intel and Pacer is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Pacer Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Financial 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 Pacer Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Financial has no effect on the direction of Intel i.e., Intel and Pacer Financial go up and down completely randomly.

Pair Corralation between Intel and Pacer Financial

Given the investment horizon of 90 days Intel is expected to under-perform the Pacer Financial. But the stock apears to be less risky and, when comparing its historical volatility, Intel is 1.03 times less risky than Pacer Financial. The stock trades about -0.02 of its potential returns per unit of risk. The Pacer Financial is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  1,353  in Pacer Financial on September 17, 2024 and sell it today you would earn a total of  278.45  from holding Pacer Financial or generate 20.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	32.31%
Values	Daily Returns

Intel  vs.  Pacer Financial

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 rather sound basic indicators, Intel is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pacer Financial

Risk-Adjusted Performance

0 of 100

Strong

Over the last 90 days Pacer Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Pacer Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intel and Pacer Financial

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

The idea behind Intel and Pacer Financial 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.