Correlation Between Intel and Adams Diversified

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

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

Diversification Opportunities for Intel and Adams Diversified

0.2

Correlation Coefficient

Intel  Adams Diversified

Modest diversification

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

Pair Corralation between Intel and Adams Diversified

Given the investment horizon of 90 days Intel is expected to under-perform the Adams Diversified. In addition to that, Intel is 4.86 times more volatile than Adams Diversified Equity. It trades about 0.0 of its total potential returns per unit of risk. Adams Diversified Equity is currently generating about 0.01 per unit of volatility. If you would invest  2,012  in Adams Diversified Equity on November 29, 2024 and sell it today you would earn a total of  2.00  from holding Adams Diversified Equity or generate 0.1% 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.  Adams Diversified Equity

Intel

Risk-Adjusted Performance

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 rather sound basic indicators, Intel is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Adams Diversified Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adams Diversified Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Adams Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Intel and Adams Diversified

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

The idea behind Intel and Adams Diversified 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.