Correlation Between Intel and IShares MSCI

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

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

Diversification Opportunities for Intel and IShares MSCI

0.75

Correlation Coefficient

Intel  IShares MSCI

Poor diversification

The 3 months correlation between Intel and IShares is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Intel and iShares MSCI South in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI South 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI South has no effect on the direction of Intel i.e., Intel and IShares MSCI go up and down completely randomly.

Pair Corralation between Intel and IShares MSCI

Given the investment horizon of 90 days Intel is expected to generate 2.81 times more return on investment than IShares MSCI. However, Intel is 2.81 times more volatile than iShares MSCI South. It trades about 0.07 of its potential returns per unit of risk. iShares MSCI South is currently generating about 0.08 per unit of risk. If you would invest  1,982  in Intel on December 28, 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	100.0%
Values	Daily Returns

Intel  vs.  iShares MSCI South

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.

iShares MSCI South

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI South are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, IShares MSCI may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Intel and IShares MSCI

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

The idea behind Intel and iShares MSCI South 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.