Correlation Between Intel and Innovator Equity

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

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

Diversification Opportunities for Intel and Innovator Equity

0.89

Correlation Coefficient

Intel  Innovator Equity

Very poor diversification

The 3 months correlation between Intel and Innovator is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Innovator Equity Accelerated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Equity Acc 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 Innovator Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Equity Acc has no effect on the direction of Intel i.e., Intel and Innovator Equity go up and down completely randomly.

Pair Corralation between Intel and Innovator Equity

Given the investment horizon of 90 days Intel is expected to generate 8.25 times more return on investment than Innovator Equity. However, Intel is 8.25 times more volatile than Innovator Equity Accelerated. It trades about 0.14 of its potential returns per unit of risk. Innovator Equity Accelerated is currently generating about 0.23 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  450.00  from holding Intel or generate 23.16% return on investment over 90 days.

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

Intel  vs.  Innovator Equity Accelerated

Intel

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 10 (%) 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.

Innovator Equity Acc

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Equity Accelerated are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking indicators, Innovator Equity is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Intel and Innovator Equity

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

The idea behind Intel and Innovator Equity Accelerated 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 Transaction History module to view history of all your transactions and understand their impact on performance.