Correlation Between Falcon Energy and INTEL CDR

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

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

Diversification Opportunities for Falcon Energy and INTEL CDR

0.58

Correlation Coefficient

Falcon Energy  INTEL CDR

Very weak diversification

The 3 months correlation between Falcon and INTEL is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Energy Materials and INTEL CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTEL CDR and Falcon Energy 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 Falcon Energy Materials are associated (or correlated) with INTEL CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTEL CDR has no effect on the direction of Falcon Energy i.e., Falcon Energy and INTEL CDR go up and down completely randomly.

Pair Corralation between Falcon Energy and INTEL CDR

Assuming the 90 days trading horizon Falcon Energy Materials is expected to under-perform the INTEL CDR. In addition to that, Falcon Energy is 1.56 times more volatile than INTEL CDR. It trades about -0.24 of its total potential returns per unit of risk. INTEL CDR is currently generating about -0.16 per unit of volatility. If you would invest  1,290  in INTEL CDR on October 5, 2024 and sell it today you would lose (103.00) from holding INTEL CDR or give up 7.98% of portfolio value over 90 days.

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

Falcon Energy Materials  vs.  INTEL CDR

Falcon Energy Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcon Energy Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Falcon Energy is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

INTEL CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INTEL CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Falcon Energy and INTEL CDR

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

The idea behind Falcon Energy Materials and INTEL CDR 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.