Correlation Between Intel and Harford Bank

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

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

Diversification Opportunities for Intel and Harford Bank

0.63

Correlation Coefficient

Intel  Harford Bank

Poor diversification

The 3 months correlation between Intel and Harford is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Harford Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harford 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 Harford Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harford Bank has no effect on the direction of Intel i.e., Intel and Harford Bank go up and down completely randomly.

Pair Corralation between Intel and Harford Bank

Given the investment horizon of 90 days Intel is expected to under-perform the Harford Bank. In addition to that, Intel is 1.35 times more volatile than Harford Bank. It trades about 0.0 of its total potential returns per unit of risk. Harford Bank is currently generating about 0.01 per unit of volatility. If you would invest  3,285  in Harford Bank on September 19, 2024 and sell it today you would earn a total of  90.00  from holding Harford Bank or generate 2.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	76.61%
Values	Daily Returns

Intel  vs.  Harford 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 latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Harford Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harford Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Harford Bank is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Intel and Harford Bank

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

The idea behind Intel and Harford 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.