Correlation Between Intel and JPM America

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

By analyzing existing cross correlation between Intel and JPM America Equity, you can compare the effects of market volatilities on Intel and JPM America 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 JPM America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and JPM America.

Diversification Opportunities for Intel and JPM America

0.2

Correlation Coefficient

Intel  JPM America

Modest diversification

The 3 months correlation between Intel and JPM is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Intel and JPM America Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM America Equity 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 JPM America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM America Equity has no effect on the direction of Intel i.e., Intel and JPM America go up and down completely randomly.

Pair Corralation between Intel and JPM America

Assuming the 90 days trading horizon Intel is expected to under-perform the JPM America. In addition to that, Intel is 3.18 times more volatile than JPM America Equity. It trades about -0.07 of its total potential returns per unit of risk. JPM America Equity is currently generating about 0.08 per unit of volatility. If you would invest  41,518  in JPM America Equity on September 22, 2024 and sell it today you would earn a total of  1,602  from holding JPM America Equity or generate 3.86% return on investment over 90 days.

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

Intel  vs.  JPM America Equity

Intel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

JPM America Equity

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPM America Equity are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather weak technical and fundamental indicators, JPM America may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Intel and JPM America

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

The idea behind Intel and JPM America Equity 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..