Correlation Between NLIGHT and Intel

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

By analyzing existing cross correlation between nLIGHT Inc and Intel, you can compare the effects of market volatilities on NLIGHT and Intel 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 NLIGHT with a short position of Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of NLIGHT and Intel.

Diversification Opportunities for NLIGHT and Intel

0.21

Correlation Coefficient

NLIGHT  Intel

Modest diversification

The 3 months correlation between NLIGHT and Intel is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding nLIGHT Inc and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and NLIGHT 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 nLIGHT Inc are associated (or correlated) with Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of NLIGHT i.e., NLIGHT and Intel go up and down completely randomly.

Pair Corralation between NLIGHT and Intel

Given the investment horizon of 90 days NLIGHT is expected to generate 3.11 times less return on investment than Intel. In addition to that, NLIGHT is 1.98 times more volatile than Intel. It trades about 0.02 of its total potential returns per unit of risk. Intel is currently generating about 0.12 per unit of volatility. If you would invest  2,010  in Intel on September 2, 2024 and sell it today you would earn a total of  395.00  from holding Intel or generate 19.65% return on investment over 90 days.

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

nLIGHT Inc  vs.  Intel

nLIGHT Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in nLIGHT Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, NLIGHT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Intel

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 9 (%) 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.

Pair Trading with NLIGHT and Intel

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

The idea behind nLIGHT Inc and Intel 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.