Correlation Between Intel and Pacific Financial

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

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

Diversification Opportunities for Intel and Pacific Financial

0.62

Correlation Coefficient

Intel  Pacific Financial

Poor diversification

The 3 months correlation between Intel and Pacific is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Pacific Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Financial Corp 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 Pacific Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Financial Corp has no effect on the direction of Intel i.e., Intel and Pacific Financial go up and down completely randomly.

Pair Corralation between Intel and Pacific Financial

Given the investment horizon of 90 days Intel is expected to generate 2.29 times more return on investment than Pacific Financial. However, Intel is 2.29 times more volatile than Pacific Financial Corp. It trades about 0.1 of its potential returns per unit of risk. Pacific Financial Corp is currently generating about 0.18 per unit of risk. If you would invest  1,943  in Intel on September 4, 2024 and sell it today you would earn a total of  304.00  from holding Intel or generate 15.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Intel  vs.  Pacific Financial Corp

Intel

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Intel exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pacific Financial Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Financial Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Pacific Financial exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intel and Pacific Financial

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

The idea behind Intel and Pacific Financial Corp 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.