Correlation Between ConocoPhillips and Intel

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

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

Diversification Opportunities for ConocoPhillips and Intel

0.74

Correlation Coefficient

ConocoPhillips  Intel

Poor diversification

The 3 months correlation between ConocoPhillips and Intel is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding ConocoPhillips and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and ConocoPhillips 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 ConocoPhillips 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 ConocoPhillips i.e., ConocoPhillips and Intel go up and down completely randomly.

Pair Corralation between ConocoPhillips and Intel

Assuming the 90 days horizon ConocoPhillips is expected to generate 2.59 times less return on investment than Intel. But when comparing it to its historical volatility, ConocoPhillips is 1.66 times less risky than Intel. It trades about 0.05 of its potential returns per unit of risk. Intel is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,751  in Intel on September 13, 2024 and sell it today you would earn a total of  220.00  from holding Intel or generate 12.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

ConocoPhillips  vs.  Intel

ConocoPhillips

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ConocoPhillips are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ConocoPhillips is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Intel

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Intel unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ConocoPhillips and Intel

The main advantage of trading using opposite ConocoPhillips and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConocoPhillips 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 ConocoPhillips 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.