Correlation Between Intel and 126650DL1

Can any of the company-specific risk be diversified away by investing in both Intel and 126650DL1 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 126650DL1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Intel and CVS HEALTH P, you can compare the effects of market volatilities on Intel and 126650DL1 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 126650DL1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and 126650DL1.

Diversification Opportunities for Intel and 126650DL1

-0.33

Correlation Coefficient

Intel  126650DL1

Very good diversification

The 3 months correlation between Intel and 126650DL1 is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Intel and CVS HEALTH P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS HEALTH P 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 126650DL1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS HEALTH P has no effect on the direction of Intel i.e., Intel and 126650DL1 go up and down completely randomly.

Pair Corralation between Intel and 126650DL1

Given the investment horizon of 90 days Intel is expected to generate 1.4 times more return on investment than 126650DL1. However, Intel is 1.4 times more volatile than CVS HEALTH P. It trades about 0.11 of its potential returns per unit of risk. CVS HEALTH P is currently generating about 0.06 per unit of risk. If you would invest  2,010  in Intel on September 3, 2024 and sell it today you would earn a total of  383.00  from holding Intel or generate 19.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.19%
Values	Daily Returns

Intel  vs.  CVS HEALTH P

Intel

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Intel exhibited solid returns over the last few months and may actually be approaching a breakup point.

CVS HEALTH P

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CVS HEALTH P are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, 126650DL1 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Intel and 126650DL1

The main advantage of trading using opposite Intel and 126650DL1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, 126650DL1 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 126650DL1 will offset losses from the drop in 126650DL1's long position.

The idea behind Intel and CVS HEALTH P 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.