Correlation Between Intel and Vanguard Consumer

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

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

Diversification Opportunities for Intel and Vanguard Consumer

-0.17

Correlation Coefficient

Intel  Vanguard Consumer

Good diversification

The 3 months correlation between Intel and Vanguard is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Vanguard Consumer Staples in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Consumer Staples 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 Vanguard Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Consumer Staples has no effect on the direction of Intel i.e., Intel and Vanguard Consumer go up and down completely randomly.

Pair Corralation between Intel and Vanguard Consumer

Given the investment horizon of 90 days Intel is expected to generate 5.22 times more return on investment than Vanguard Consumer. However, Intel is 5.22 times more volatile than Vanguard Consumer Staples. It trades about 0.05 of its potential returns per unit of risk. Vanguard Consumer Staples is currently generating about 0.09 per unit of risk. If you would invest  2,204  in Intel on August 30, 2024 and sell it today you would earn a total of  161.00  from holding Intel or generate 7.3% return on investment over 90 days.

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

Intel  vs.  Vanguard Consumer Staples

Intel

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 4 (%) 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 December 2024.

Vanguard Consumer Staples

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Consumer Staples are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Vanguard Consumer is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Intel and Vanguard Consumer

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

The idea behind Intel and Vanguard Consumer Staples 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.