Correlation Between Intel and JPMorgan Diversified

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

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

Diversification Opportunities for Intel and JPMorgan Diversified

0.85

Correlation Coefficient

Intel  JPMorgan Diversified

Very poor diversification

The 3 months correlation between Intel and JPMorgan is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Intel and JPMorgan Diversified Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Diversified 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 JPMorgan Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Diversified has no effect on the direction of Intel i.e., Intel and JPMorgan Diversified go up and down completely randomly.

Pair Corralation between Intel and JPMorgan Diversified

Given the investment horizon of 90 days Intel is expected to generate 2.3 times more return on investment than JPMorgan Diversified. However, Intel is 2.3 times more volatile than JPMorgan Diversified Return. It trades about 0.11 of its potential returns per unit of risk. JPMorgan Diversified Return is currently generating about 0.15 per unit of risk. If you would invest  2,010  in Intel on August 31, 2024 and sell it today you would earn a total of  355.00  from holding Intel or generate 17.66% return on investment over 90 days.

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

Intel  vs.  JPMorgan Diversified Return

Intel

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 8 (%) 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.

JPMorgan Diversified

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Diversified Return are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, JPMorgan Diversified may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Intel and JPMorgan Diversified

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

The idea behind Intel and JPMorgan Diversified Return 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.