Correlation Between Intel and American Funds

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

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

Diversification Opportunities for Intel and American Funds

-0.47

Correlation Coefficient

Intel  American Funds

Very good diversification

The 3 months correlation between Intel and American is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Intel and American Funds Lege in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Lege 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Lege has no effect on the direction of Intel i.e., Intel and American Funds go up and down completely randomly.

Pair Corralation between Intel and American Funds

Given the investment horizon of 90 days Intel is expected to under-perform the American Funds. In addition to that, Intel is 14.61 times more volatile than American Funds Lege. It trades about -0.4 of its total potential returns per unit of risk. American Funds Lege is currently generating about 0.15 per unit of volatility. If you would invest  964.00  in American Funds Lege on September 12, 2024 and sell it today you would earn a total of  5.00  from holding American Funds Lege or generate 0.52% 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.  American Funds Lege

Intel

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Intel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

American Funds Lege

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Funds Lege has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, American Funds 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 American Funds

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

The idea behind Intel and American Funds Lege 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.