Correlation Between Intel and FEDEX

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

By analyzing existing cross correlation between Intel and FEDEX P 475, you can compare the effects of market volatilities on Intel and FEDEX 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 FEDEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and FEDEX.

Diversification Opportunities for Intel and FEDEX

-0.3

Correlation Coefficient

Intel  FEDEX

Very good diversification

The 3 months correlation between Intel and FEDEX is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Intel and FEDEX P 475 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEDEX P 475 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 FEDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEDEX P 475 has no effect on the direction of Intel i.e., Intel and FEDEX go up and down completely randomly.

Pair Corralation between Intel and FEDEX

Given the investment horizon of 90 days Intel is expected to generate 1.92 times more return on investment than FEDEX. However, Intel is 1.92 times more volatile than FEDEX P 475. It trades about 0.03 of its potential returns per unit of risk. FEDEX P 475 is currently generating about -0.08 per unit of risk. If you would invest  1,966  in Intel on September 13, 2024 and sell it today you would earn a total of  46.00  from holding Intel or generate 2.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Intel  vs.  FEDEX P 475

Intel

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Intel is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

FEDEX P 475

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FEDEX P 475 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for FEDEX P 475 investors.

Pair Trading with Intel and FEDEX

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

The idea behind Intel and FEDEX P 475 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.