Correlation Between Intel and Principal Exchange

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

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

Diversification Opportunities for Intel and Principal Exchange

0.61

Correlation Coefficient

Intel  Principal Exchange

Poor diversification

The 3 months correlation between Intel and Principal is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Principal Exchange Traded Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Exchange 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 Principal Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Exchange has no effect on the direction of Intel i.e., Intel and Principal Exchange go up and down completely randomly.

Pair Corralation between Intel and Principal Exchange

Given the investment horizon of 90 days Intel is expected to generate 4.2 times more return on investment than Principal Exchange. However, Intel is 4.2 times more volatile than Principal Exchange Traded Funds. It trades about 0.07 of its potential returns per unit of risk. Principal Exchange Traded Funds is currently generating about 0.07 per unit of risk. If you would invest  1,982  in Intel on December 29, 2024 and sell it today you would earn a total of  289.00  from holding Intel or generate 14.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Intel  vs.  Principal Exchange Traded Fund

Intel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Intel exhibited solid returns over the last few months and may actually be approaching a breakup point.

Principal Exchange

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Principal Exchange Traded Funds are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Principal Exchange is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Intel and Principal Exchange

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

The idea behind Intel and Principal Exchange Traded Funds 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.