Correlation Between Target and Intel
Can any of the company-specific risk be diversified away by investing in both Target 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 Target and Intel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target and Intel, you can compare the effects of market volatilities on Target 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 Target with a short position of Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target and Intel.
Diversification Opportunities for Target and Intel
Very good diversification
The 3 months correlation between Target and Intel is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Target and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and Target 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 Target 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 Target i.e., Target and Intel go up and down completely randomly.
Pair Corralation between Target and Intel
Considering the 90-day investment horizon Target is expected to generate 0.88 times more return on investment than Intel. However, Target is 1.14 times less risky than Intel. It trades about 0.07 of its potential returns per unit of risk. Intel is currently generating about 0.0 per unit of risk. If you would invest 13,151 in Target on January 24, 2024 and sell it today you would earn a total of 3,560 from holding Target or generate 27.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Target vs. Intel
Performance |
| Timeline |
| Target |
| Intel |
Target and Intel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Target and Intel
The main advantage of trading using opposite Target and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target 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.| Target vs. Big Lots | Target vs. Aquagold International | Target vs. Thrivent High Yield | Target vs. Morningstar Unconstrained Allocation |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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