Correlation Between Intel and 1st Capital

Can any of the company-specific risk be diversified away by investing in both Intel and 1st Capital 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 1st Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Intel and 1st Capital Bank, you can compare the effects of market volatilities on Intel and 1st Capital 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 1st Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and 1st Capital.

Diversification Opportunities for Intel and 1st Capital

0.87

Correlation Coefficient

Intel  1st Capital

Very poor diversification

The 3 months correlation between Intel and 1st is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Intel and 1st Capital Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1st Capital 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 1st Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1st Capital Bank has no effect on the direction of Intel i.e., Intel and 1st Capital go up and down completely randomly.

Pair Corralation between Intel and 1st Capital

Given the investment horizon of 90 days Intel is expected to under-perform the 1st Capital. In addition to that, Intel is 2.58 times more volatile than 1st Capital Bank. It trades about -0.07 of its total potential returns per unit of risk. 1st Capital Bank is currently generating about 0.19 per unit of volatility. If you would invest  990.00  in 1st Capital Bank on September 4, 2024 and sell it today you would earn a total of  410.00  from holding 1st Capital Bank or generate 41.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	60.73%
Values	Daily Returns

Intel  vs.  1st Capital Bank

Intel

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Intel exhibited solid returns over the last few months and may actually be approaching a breakup point.

1st Capital Bank

Risk-Adjusted Performance

0 of 100

Very Strong

Over the last 90 days 1st Capital Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat conflicting basic indicators, 1st Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Intel and 1st Capital

The main advantage of trading using opposite Intel and 1st Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, 1st Capital 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 1st Capital will offset losses from the drop in 1st Capital's long position.

The idea behind Intel and 1st Capital 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.