Correlation Between Blue Square and Intel
Can any of the company-specific risk be diversified away by investing in both Blue Square 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 Blue Square and Intel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blue Square Real and Intel, you can compare the effects of market volatilities on Blue Square 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 Blue Square with a short position of Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Square and Intel.
Diversification Opportunities for Blue Square and Intel
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Blue and Intel is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Blue Square Real and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and Blue Square 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 Blue Square Real 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 Blue Square i.e., Blue Square and Intel go up and down completely randomly.
Pair Corralation between Blue Square and Intel
Assuming the 90 days trading horizon Blue Square Real is expected to generate 1.31 times more return on investment than Intel. However, Blue Square is 1.31 times more volatile than Intel. It trades about 0.22 of its potential returns per unit of risk. Intel is currently generating about -0.33 per unit of risk. If you would invest 2,470,981 in Blue Square Real on January 25, 2024 and sell it today you would earn a total of 309,019 from holding Blue Square Real or generate 12.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 77.27% |
| Values | Daily Returns |
Blue Square Real vs. Intel
Performance |
| Timeline |
| Blue Square Real |
| Intel |
Blue Square and Intel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blue Square and Intel
The main advantage of trading using opposite Blue Square and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Square 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 Blue Square Real 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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