Correlation Between NVIDIA and Intel

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

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

Diversification Opportunities for NVIDIA and Intel

-0.12

Correlation Coefficient

NVIDIA  Intel

Good diversification

The 3 months correlation between NVIDIA and Intel is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and NVIDIA 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 NVIDIA 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 NVIDIA i.e., NVIDIA and Intel go up and down completely randomly.

Pair Corralation between NVIDIA and Intel

Assuming the 90 days trading horizon NVIDIA is expected to under-perform the Intel. But the stock apears to be less risky and, when comparing its historical volatility, NVIDIA is 1.08 times less risky than Intel. The stock trades about -0.08 of its potential returns per unit of risk. The Intel is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  41,000  in Intel on December 30, 2024 and sell it today you would earn a total of  5,400  from holding Intel or generate 13.17% return on investment over 90 days.

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

NVIDIA  vs.  Intel

NVIDIA

Risk-Adjusted Performance

Very Weak

Over the last 90 days NVIDIA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Intel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Intel showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVIDIA and Intel

The main advantage of trading using opposite NVIDIA and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA 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 NVIDIA 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.