Correlation Between Global Ship and Intel

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

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

Diversification Opportunities for Global Ship and Intel

0.08

Correlation Coefficient

Global Ship  Intel

Significant diversification

The 3 months correlation between Global and Intel is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and Global Ship 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 Global Ship Lease 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 Global Ship i.e., Global Ship and Intel go up and down completely randomly.

Pair Corralation between Global Ship and Intel

Assuming the 90 days horizon Global Ship Lease is expected to under-perform the Intel. But the stock apears to be less risky and, when comparing its historical volatility, Global Ship Lease is 2.06 times less risky than Intel. The stock trades about -0.01 of its potential returns per unit of risk. The Intel is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,809  in Intel on September 15, 2024 and sell it today you would earn a total of  186.00  from holding Intel or generate 10.28% return on investment over 90 days.

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

Global Ship Lease  vs.  Intel

Global Ship Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Ship Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Global Ship 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

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 comparatively fragile essential indicators, Intel unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Ship and Intel

The main advantage of trading using opposite Global Ship and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship 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 Global Ship Lease 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.