Correlation Between Intel and Spindletop

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

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

Diversification Opportunities for Intel and Spindletop

0.33

Correlation Coefficient

Intel  Spindletop

Weak diversification

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

Pair Corralation between Intel and Spindletop

Given the investment horizon of 90 days Intel is expected to generate 1.36 times less return on investment than Spindletop. But when comparing it to its historical volatility, Intel is 1.61 times less risky than Spindletop. It trades about 0.1 of its potential returns per unit of risk. Spindletop OG is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  200.00  in Spindletop OG on December 20, 2024 and sell it today you would earn a total of  50.00  from holding Spindletop OG or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Intel  vs.  Spindletop OG

Intel

Risk-Adjusted Performance

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 weak basic indicators, Intel exhibited solid returns over the last few months and may actually be approaching a breakup point.

Spindletop OG

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Spindletop OG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Spindletop exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intel and Spindletop

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

The idea behind Intel and Spindletop OG 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.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.