Correlation Between Intel and Health Care

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

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

Diversification Opportunities for Intel and Health Care

0.33

Correlation Coefficient

Intel  Health Care

Weak diversification

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

Pair Corralation between Intel and Health Care

Given the investment horizon of 90 days Intel is expected to generate 5.52 times more return on investment than Health Care. However, Intel is 5.52 times more volatile than Health Care Select. It trades about 0.09 of its potential returns per unit of risk. Health Care Select is currently generating about 0.13 per unit of risk. If you would invest  1,982  in Intel on December 28, 2024 and sell it today you would earn a total of  380.00  from holding Intel or generate 19.17% return on investment over 90 days.

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

Intel  vs.  Health Care Select

Intel

Risk-Adjusted Performance

Modest

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

Health Care Select

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Health Care Select are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Health Care may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Intel and Health Care

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

The idea behind Intel and Health Care Select 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.