Correlation Between Intel and SPDR Kensho

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

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

Diversification Opportunities for Intel and SPDR Kensho

0.86

Correlation Coefficient

Intel  SPDR Kensho

Very poor diversification

The 3 months correlation between Intel and SPDR is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Intel and SPDR Kensho New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Kensho New 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 SPDR Kensho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Kensho New has no effect on the direction of Intel i.e., Intel and SPDR Kensho go up and down completely randomly.

Pair Corralation between Intel and SPDR Kensho

Given the investment horizon of 90 days Intel is expected to generate 2.35 times more return on investment than SPDR Kensho. However, Intel is 2.35 times more volatile than SPDR Kensho New. It trades about 0.11 of its potential returns per unit of risk. SPDR Kensho New is currently generating about 0.22 per unit of risk. If you would invest  2,010  in Intel on September 3, 2024 and sell it today you would earn a total of  383.00  from holding Intel or generate 19.05% return on investment over 90 days.

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

Intel  vs.  SPDR Kensho New

Intel

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Intel exhibited solid returns over the last few months and may actually be approaching a breakup point.

SPDR Kensho New

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Kensho New are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile primary indicators, SPDR Kensho reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intel and SPDR Kensho

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

The idea behind Intel and SPDR Kensho New 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.