Correlation Between QUALCOMM Incorporated and Intel

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

By analyzing existing cross correlation between QUALCOMM Incorporated and Intel, you can compare the effects of market volatilities on QUALCOMM Incorporated and Intel 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 QUALCOMM Incorporated with a short position of Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of QUALCOMM Incorporated and Intel.

Diversification Opportunities for QUALCOMM Incorporated and Intel

0.39

Correlation Coefficient

QUALCOMM Incorporated  Intel

Weak diversification

The 3 months correlation between QUALCOMM and Intel is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding QUALCOMM Incorporated and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and QUALCOMM Incorporated 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 QUALCOMM Incorporated are associated (or correlated) with Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of QUALCOMM Incorporated i.e., QUALCOMM Incorporated and Intel go up and down completely randomly.

Pair Corralation between QUALCOMM Incorporated and Intel

Assuming the 90 days trading horizon QUALCOMM Incorporated is expected to generate 0.76 times more return on investment than Intel. However, QUALCOMM Incorporated is 1.32 times less risky than Intel. It trades about -0.02 of its potential returns per unit of risk. Intel is currently generating about -0.05 per unit of risk. If you would invest  320,335  in QUALCOMM Incorporated on September 23, 2024 and sell it today you would lose (14,835) from holding QUALCOMM Incorporated or give up 4.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

QUALCOMM Incorporated  vs.  Intel

QUALCOMM Incorporated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days QUALCOMM Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, QUALCOMM Incorporated is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Intel

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with QUALCOMM Incorporated and Intel

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

The idea behind QUALCOMM Incorporated and Intel 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.