Correlation Between Intel and TEXAS

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

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

Diversification Opportunities for Intel and TEXAS

-0.54

Correlation Coefficient

Intel  TEXAS

Excellent diversification

The 3 months correlation between Intel and TEXAS is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Intel and TEXAS INSTRS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TEXAS INSTRS INC 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 TEXAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TEXAS INSTRS INC has no effect on the direction of Intel i.e., Intel and TEXAS go up and down completely randomly.

Pair Corralation between Intel and TEXAS

Given the investment horizon of 90 days Intel is expected to generate 13.32 times more return on investment than TEXAS. However, Intel is 13.32 times more volatile than TEXAS INSTRS INC. It trades about 0.1 of its potential returns per unit of risk. TEXAS INSTRS INC is currently generating about -0.08 per unit of risk. If you would invest  1,943  in Intel on September 4, 2024 and sell it today you would earn a total of  304.00  from holding Intel or generate 15.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

Intel  vs.  TEXAS INSTRS INC

Intel

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Intel exhibited solid returns over the last few months and may actually be approaching a breakup point.

TEXAS INSTRS INC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Intel and TEXAS

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

The idea behind Intel and TEXAS INSTRS INC 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.