Correlation Between Intel and Bright Minds

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

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

Diversification Opportunities for Intel and Bright Minds

0.56

Correlation Coefficient

Intel  Bright Minds

Very weak diversification

The 3 months correlation between Intel and Bright is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Bright Minds Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Minds Biosciences 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 Bright Minds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Minds Biosciences has no effect on the direction of Intel i.e., Intel and Bright Minds go up and down completely randomly.

Pair Corralation between Intel and Bright Minds

Given the investment horizon of 90 days Intel is expected to generate 122.11 times less return on investment than Bright Minds. But when comparing it to its historical volatility, Intel is 43.36 times less risky than Bright Minds. It trades about 0.05 of its potential returns per unit of risk. Bright Minds Biosciences is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  106.00  in Bright Minds Biosciences on August 30, 2024 and sell it today you would earn a total of  3,812  from holding Bright Minds Biosciences or generate 3596.23% return on investment over 90 days.

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

Intel  vs.  Bright Minds Biosciences

Intel

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Intel may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Bright Minds Biosciences

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bright Minds Biosciences are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Bright Minds reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intel and Bright Minds

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

The idea behind Intel and Bright Minds Biosciences 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..