Correlation Between FBD Holdings and Intel

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Can any of the company-specific risk be diversified away by investing in both FBD Holdings 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 FBD Holdings and Intel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FBD Holdings PLC and Intel, you can compare the effects of market volatilities on FBD Holdings 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 FBD Holdings with a short position of Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of FBD Holdings and Intel.

Diversification Opportunities for FBD Holdings and Intel

-0.62
  Correlation Coefficient

Excellent diversification

The 3 months correlation between FBD and Intel is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding FBD Holdings PLC and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and FBD Holdings 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 FBD Holdings PLC 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 FBD Holdings i.e., FBD Holdings and Intel go up and down completely randomly.

Pair Corralation between FBD Holdings and Intel

Assuming the 90 days trading horizon FBD Holdings is expected to generate 1.21 times less return on investment than Intel. But when comparing it to its historical volatility, FBD Holdings PLC is 2.14 times less risky than Intel. It trades about 0.18 of its potential returns per unit of risk. Intel is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4,199  in Intel on December 30, 2023 and sell it today you would earn a total of  218.00  from holding Intel or generate 5.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

FBD Holdings PLC  vs.  Intel

 Performance 
       Timeline  
FBD Holdings PLC 

Risk-Adjusted Performance

13 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in FBD Holdings PLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, FBD Holdings reported solid returns over the last few months and may actually be approaching a breakup point.
Intel 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

FBD Holdings and Intel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FBD Holdings and Intel

The main advantage of trading using opposite FBD Holdings and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FBD Holdings 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 FBD Holdings PLC 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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