Correlation Between Dow Jones and Intel
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Intel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Intel, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Intel.
Diversification Opportunities for Dow Jones and Intel
Weak diversification
The 3 months correlation between Dow and Intel is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and Intel go up and down completely randomly.
Pair Corralation between Dow Jones and Intel
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.26 times more return on investment than Intel. However, Dow Jones Industrial is 3.87 times less risky than Intel. It trades about 0.02 of its potential returns per unit of risk. Intel is currently generating about -0.04 per unit of risk. If you would invest 4,251,495 in Dow Jones Industrial on September 23, 2024 and sell it today you would earn a total of 32,531 from holding Dow Jones Industrial or generate 0.77% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 97.73% |
Values | Daily Returns |
Dow Jones Industrial vs. Intel
Performance |
Timeline |
Dow Jones and Intel Volatility Contrast
Predicted Return Density |
Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Intel
Pair trading matchups for Intel
Pair Trading with Dow Jones and Intel
The main advantage of trading using opposite Dow Jones and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.Dow Jones vs. Nok Airlines Public | Dow Jones vs. Alaska Air Group | Dow Jones vs. Universal Music Group | Dow Jones vs. Copa Holdings SA |
Intel vs. NVIDIA | Intel vs. Taiwan Semiconductor Manufacturing | Intel vs. Broadcom | Intel vs. Texas Instruments Incorporated |
Check out your portfolio center.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.
Other Complementary Tools
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Share Portfolio Track or share privately all of your investments from the convenience of any device | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |