Correlation Between Intel and Qualcomm

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

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

Diversification Opportunities for Intel and Qualcomm

0.09

Correlation Coefficient

Intel  Qualcomm

Significant diversification

The 3 months correlation between Intel and Qualcomm is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Qualcomm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qualcomm 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 Qualcomm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qualcomm has no effect on the direction of Intel i.e., Intel and Qualcomm go up and down completely randomly.

Pair Corralation between Intel and Qualcomm

Assuming the 90 days trading horizon Intel is expected to under-perform the Qualcomm. In addition to that, Intel is 1.53 times more volatile than Qualcomm. It trades about -0.02 of its total potential returns per unit of risk. Qualcomm is currently generating about 0.02 per unit of volatility. If you would invest  8,157  in Qualcomm on September 26, 2024 and sell it today you would earn a total of  93.00  from holding Qualcomm or generate 1.14% return on investment over 90 days.

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

Intel  vs.  Qualcomm

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. Despite somewhat strong essential indicators, Intel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Qualcomm

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Qualcomm are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Qualcomm may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Intel and Qualcomm

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

The idea behind Intel and Qualcomm 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.