Correlation Between Intel and Buffalo Growth

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

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

Diversification Opportunities for Intel and Buffalo Growth

0.4

Correlation Coefficient

Intel  Buffalo Growth

Very weak diversification

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

Pair Corralation between Intel and Buffalo Growth

Given the investment horizon of 90 days Intel is expected to generate 2.55 times more return on investment than Buffalo Growth. However, Intel is 2.55 times more volatile than Buffalo Growth. It trades about 0.01 of its potential returns per unit of risk. Buffalo Growth is currently generating about -0.12 per unit of risk. If you would invest  2,393  in Intel on December 1, 2024 and sell it today you would lose (20.00) from holding Intel or give up 0.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Intel  vs.  Buffalo Growth

Intel

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Buffalo Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Buffalo Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund'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 fund investors.

Pair Trading with Intel and Buffalo Growth

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

The idea behind Intel and Buffalo Growth 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.