Correlation Between Intel and Australian Vanadium

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

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

Diversification Opportunities for Intel and Australian Vanadium

-0.54

Correlation Coefficient

Intel  Australian Vanadium

Excellent diversification

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

Pair Corralation between Intel and Australian Vanadium

Given the investment horizon of 90 days Intel is expected to generate 0.26 times more return on investment than Australian Vanadium. However, Intel is 3.84 times less risky than Australian Vanadium. It trades about 0.12 of its potential returns per unit of risk. Australian Vanadium Limited is currently generating about -0.04 per unit of risk. If you would invest  2,010  in Intel on September 2, 2024 and sell it today you would earn a total of  395.00  from holding Intel or generate 19.65% return on investment over 90 days.

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

Intel  vs.  Australian Vanadium Limited

Intel

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Intel exhibited solid returns over the last few months and may actually be approaching a breakup point.

Australian Vanadium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Australian Vanadium Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Intel and Australian Vanadium

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

The idea behind Intel and Australian Vanadium Limited 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.