Correlation Between INTEL CDR and European Residential

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

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

Diversification Opportunities for INTEL CDR and European Residential

0.4

Correlation Coefficient

INTEL CDR  European Residential

Very weak diversification

The 3 months correlation between INTEL and European is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding INTEL CDR and European Residential Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Residential Real and INTEL CDR 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 CDR are associated (or correlated) with European Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Residential Real has no effect on the direction of INTEL CDR i.e., INTEL CDR and European Residential go up and down completely randomly.

Pair Corralation between INTEL CDR and European Residential

Assuming the 90 days trading horizon INTEL CDR is expected to generate 0.54 times more return on investment than European Residential. However, INTEL CDR is 1.86 times less risky than European Residential. It trades about 0.01 of its potential returns per unit of risk. European Residential Real is currently generating about -0.03 per unit of risk. If you would invest  1,319  in INTEL CDR on October 22, 2024 and sell it today you would lose (22.00) from holding INTEL CDR or give up 1.67% of portfolio value over 90 days.

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

INTEL CDR  vs.  European Residential Real

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 rather sound technical and fundamental indicators, INTEL CDR is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

European Residential Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days European Residential Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with INTEL CDR and European Residential

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

The idea behind INTEL CDR and European Residential Real 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.