Correlation Between Intel and Pure Storage

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

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

Diversification Opportunities for Intel and Pure Storage

-0.19

Correlation Coefficient

Intel  Pure Storage

Good diversification

The 3 months correlation between Intel and Pure is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Pure Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Storage and Intel 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 Intel are associated (or correlated) with Pure Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Storage has no effect on the direction of Intel i.e., Intel and Pure Storage go up and down completely randomly.

Pair Corralation between Intel and Pure Storage

Assuming the 90 days trading horizon Intel is expected to under-perform the Pure Storage. But the stock apears to be less risky and, when comparing its historical volatility, Intel is 1.69 times less risky than Pure Storage. The stock trades about -0.26 of its potential returns per unit of risk. The Pure Storage is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  4,600  in Pure Storage on September 18, 2024 and sell it today you would earn a total of  1,457  from holding Pure Storage or generate 31.67% return on investment over 90 days.

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

Intel  vs.  Pure Storage

Intel

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Intel is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pure Storage

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pure Storage are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Pure Storage reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intel and Pure Storage

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

The idea behind Intel and Pure Storage 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.