Correlation Between INTEL CDR and Valeura Energy

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

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

Diversification Opportunities for INTEL CDR and Valeura Energy

-0.54

Correlation Coefficient

INTEL CDR  Valeura Energy

Excellent diversification

The 3 months correlation between INTEL and Valeura is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding INTEL CDR and Valeura Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valeura Energy 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 Valeura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valeura Energy has no effect on the direction of INTEL CDR i.e., INTEL CDR and Valeura Energy go up and down completely randomly.

Pair Corralation between INTEL CDR and Valeura Energy

Assuming the 90 days trading horizon INTEL CDR is expected to under-perform the Valeura Energy. But the stock apears to be less risky and, when comparing its historical volatility, INTEL CDR is 1.44 times less risky than Valeura Energy. The stock trades about -0.02 of its potential returns per unit of risk. The Valeura Energy is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  258.00  in Valeura Energy on October 4, 2024 and sell it today you would earn a total of  468.00  from holding Valeura Energy or generate 181.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	89.49%
Values	Daily Returns

INTEL CDR  vs.  Valeura Energy

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 abnormal 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.

Valeura Energy

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Valeura Energy are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Valeura Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INTEL CDR and Valeura Energy

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

The idea behind INTEL CDR and Valeura Energy 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.