Correlation Between Intel and US Silica

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

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

Diversification Opportunities for Intel and US Silica

-0.33

Correlation Coefficient

Intel  US Silica

Very good diversification

The 3 months correlation between Intel and SLCA is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Intel and US Silica Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Silica 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 US Silica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Silica Holdings has no effect on the direction of Intel i.e., Intel and US Silica go up and down completely randomly.

Pair Corralation between Intel and US Silica

Given the investment horizon of 90 days Intel is expected to generate 0.51 times more return on investment than US Silica. However, Intel is 1.96 times less risky than US Silica. It trades about 0.0 of its potential returns per unit of risk. US Silica Holdings is currently generating about -0.03 per unit of risk. If you would invest  2,527  in Intel on September 19, 2024 and sell it today you would lose (597.00) from holding Intel or give up 23.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	80.44%
Values	Daily Returns

Intel  vs.  US Silica Holdings

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.

US Silica Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US Silica Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, US Silica is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Intel and US Silica

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

The idea behind Intel and US Silica 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.