Correlation Between Intel and Xerox

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

By analyzing existing cross correlation between Intel and Xerox 675 percent, you can compare the effects of market volatilities on Intel and Xerox 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 Xerox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and Xerox.

Diversification Opportunities for Intel and Xerox

-0.49

Correlation Coefficient

Intel  Xerox

Very good diversification

The 3 months correlation between Intel and Xerox is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Xerox 675 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xerox 675 percent 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 Xerox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xerox 675 percent has no effect on the direction of Intel i.e., Intel and Xerox go up and down completely randomly.

Pair Corralation between Intel and Xerox

Given the investment horizon of 90 days Intel is expected to generate 2.78 times less return on investment than Xerox. But when comparing it to its historical volatility, Intel is 1.34 times less risky than Xerox. It trades about 0.04 of its potential returns per unit of risk. Xerox 675 percent is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  7,875  in Xerox 675 percent on September 12, 2024 and sell it today you would earn a total of  1,169  from holding Xerox 675 percent or generate 14.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Intel  vs.  Xerox 675 percent

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 weak basic indicators, Intel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Xerox 675 percent

Risk-Adjusted Performance

5 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xerox 675 percent are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Xerox sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intel and Xerox

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

The idea behind Intel and Xerox 675 percent 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.