Correlation Between Space and Intel
Can any of the company-specific risk be diversified away by investing in both Space 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 Space and Intel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Space Com and Intel, you can compare the effects of market volatilities on Space 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 Space with a short position of Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Space and Intel.
Diversification Opportunities for Space and Intel
Weak diversification
The 3 months correlation between Space and Intel is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Space Com and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and Space 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 Space Com 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 Space i.e., Space and Intel go up and down completely randomly.
Pair Corralation between Space and Intel
Assuming the 90 days trading horizon Space Com is expected to under-perform the Intel. In addition to that, Space is 1.83 times more volatile than Intel. It trades about -0.09 of its total potential returns per unit of risk. Intel is currently generating about -0.01 per unit of volatility. If you would invest 4,245 in Intel on January 25, 2024 and sell it today you would lose (817.00) from holding Intel or give up 19.25% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 78.95% |
Values | Daily Returns |
Space Com vs. Intel
Performance |
Timeline |
Space Com |
Intel |
Space and Intel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Space and Intel
The main advantage of trading using opposite Space and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Space 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.Space vs. Bank Leumi Le Israel | Space vs. Teva Pharmaceutical Industries | Space vs. Bank Hapoalim | Space vs. Elbit Systems |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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