Correlation Between Intel and NextSource Materials
Can any of the company-specific risk be diversified away by investing in both Intel and NextSource Materials 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 NextSource Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel and NextSource Materials, you can compare the effects of market volatilities on Intel and NextSource Materials 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 NextSource Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and NextSource Materials.
Diversification Opportunities for Intel and NextSource Materials
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Intel and NextSource is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Intel and NextSource Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextSource Materials 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 NextSource Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextSource Materials has no effect on the direction of Intel i.e., Intel and NextSource Materials go up and down completely randomly.
Pair Corralation between Intel and NextSource Materials
Given the investment horizon of 90 days Intel is expected to under-perform the NextSource Materials. But the stock apears to be less risky and, when comparing its historical volatility, Intel is 1.43 times less risky than NextSource Materials. The stock trades about -0.14 of its potential returns per unit of risk. The NextSource Materials is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 44.00 in NextSource Materials on September 6, 2024 and sell it today you would lose (5.00) from holding NextSource Materials or give up 11.36% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Intel vs. NextSource Materials
Performance |
Timeline |
Intel |
NextSource Materials |
Intel and NextSource Materials Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Intel and NextSource Materials
The main advantage of trading using opposite Intel and NextSource Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, NextSource Materials 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 NextSource Materials will offset losses from the drop in NextSource Materials' long position.Intel vs. Marti Technologies | Intel vs. Liberty Northwest Bancorp | Intel vs. Aegean Airlines SA | Intel vs. United Fire Group |
NextSource Materials vs. Leading Edge Materials | NextSource Materials vs. Syrah Resources Limited | NextSource Materials vs. Mason Graphite | NextSource Materials vs. Graphite One |
Check out your portfolio center.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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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