Correlation Between Intel and Exchange Bank

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

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

Diversification Opportunities for Intel and Exchange Bank

-0.05

Correlation Coefficient

Intel  Exchange Bank

Good diversification

The 3 months correlation between Intel and Exchange is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Exchange Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Bank 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 Exchange Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Bank has no effect on the direction of Intel i.e., Intel and Exchange Bank go up and down completely randomly.

Pair Corralation between Intel and Exchange Bank

Given the investment horizon of 90 days Intel is expected to generate 1.37 times more return on investment than Exchange Bank. However, Intel is 1.37 times more volatile than Exchange Bank. It trades about -0.01 of its potential returns per unit of risk. Exchange Bank is currently generating about -0.03 per unit of risk. If you would invest  2,234  in Intel on October 24, 2024 and sell it today you would lose (85.00) from holding Intel or give up 3.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Intel  vs.  Exchange Bank

Intel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Intel is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Exchange Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exchange Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Exchange Bank is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Intel and Exchange Bank

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

The idea behind Intel and Exchange Bank 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 Managers module to screen money managers from public funds and ETFs managed around the world.