Correlation Between Intel and Pershing Square

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

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

Diversification Opportunities for Intel and Pershing Square

0.43

Correlation Coefficient

Intel  Pershing Square

Very weak diversification

The 3 months correlation between Intel and Pershing is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Pershing Square Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pershing Square Holdings 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 Pershing Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pershing Square Holdings has no effect on the direction of Intel i.e., Intel and Pershing Square go up and down completely randomly.

Pair Corralation between Intel and Pershing Square

Given the investment horizon of 90 days Intel is expected to generate 3.64 times more return on investment than Pershing Square. However, Intel is 3.64 times more volatile than Pershing Square Holdings. It trades about 0.11 of its potential returns per unit of risk. Pershing Square Holdings is currently generating about 0.13 per unit of risk. If you would invest  1,938  in Intel on December 5, 2024 and sell it today you would earn a total of  195.00  from holding Intel or generate 10.06% return on investment over 90 days.

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

Intel  vs.  Pershing Square Holdings

Intel

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Intel may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pershing Square Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pershing Square Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Pershing Square may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Intel and Pershing Square

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

The idea behind Intel and Pershing Square Holdings 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.