Correlation Between Amdocs and Intel
Can any of the company-specific risk be diversified away by investing in both Amdocs 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 Amdocs and Intel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amdocs and Intel, you can compare the effects of market volatilities on Amdocs 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 Amdocs with a short position of Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amdocs and Intel.
Diversification Opportunities for Amdocs and Intel
Very poor diversification
The 3 months correlation between Amdocs and Intel is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Amdocs and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and Amdocs 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 Amdocs 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 Amdocs i.e., Amdocs and Intel go up and down completely randomly.
Pair Corralation between Amdocs and Intel
Considering the 90-day investment horizon Amdocs is expected to generate 0.31 times more return on investment than Intel. However, Amdocs is 3.21 times less risky than Intel. It trades about -0.17 of its potential returns per unit of risk. Intel is currently generating about -0.34 per unit of risk. If you would invest 8,938 in Amdocs on January 26, 2024 and sell it today you would lose (264.00) from holding Amdocs or give up 2.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amdocs vs. Intel
Performance |
| Timeline |
| Amdocs |
| Intel |
Amdocs and Intel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amdocs and Intel
The main advantage of trading using opposite Amdocs and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amdocs 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 Amdocs 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.| Intel vs. NVIDIA | Intel vs. Taiwan Semiconductor Manufacturing | Intel vs. Marvell Technology Group | Intel vs. Micron Technology |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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