Correlation Between TRI Pointe and Intel

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

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

Diversification Opportunities for TRI Pointe and Intel

0.74

Correlation Coefficient

TRI Pointe  Intel

Poor diversification

The 3 months correlation between TRI and Intel is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding TRI Pointe Homes and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and TRI Pointe 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 TRI Pointe Homes 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 TRI Pointe i.e., TRI Pointe and Intel go up and down completely randomly.

Pair Corralation between TRI Pointe and Intel

Considering the 90-day investment horizon TRI Pointe is expected to generate 7.11 times less return on investment than Intel. But when comparing it to its historical volatility, TRI Pointe Homes is 1.66 times less risky than Intel. It trades about 0.03 of its potential returns per unit of risk. Intel is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,020  in Intel on October 22, 2024 and sell it today you would earn a total of  129.00  from holding Intel or generate 6.39% return on investment over 90 days.

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

TRI Pointe Homes  vs.  Intel

TRI Pointe Homes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TRI Pointe Homes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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. In spite of rather sound basic indicators, Intel is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with TRI Pointe and Intel

The main advantage of trading using opposite TRI Pointe and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRI Pointe 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 TRI Pointe Homes 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.