Correlation Between Intel and Insmed

Can any of the company-specific risk be diversified away by investing in both Intel and Insmed 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 Intel and Insmed into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Intel and Insmed Inc, you can compare the effects of market volatilities on Intel and Insmed 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 Intel with a short position of Insmed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and Insmed.

Diversification Opportunities for Intel and Insmed

0.29

Correlation Coefficient

Intel  Insmed

Modest diversification

The 3 months correlation between Intel and Insmed is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Insmed Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insmed Inc and Intel 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 Intel are associated (or correlated) with Insmed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insmed Inc has no effect on the direction of Intel i.e., Intel and Insmed go up and down completely randomly.

Pair Corralation between Intel and Insmed

Given the investment horizon of 90 days Intel is expected to generate 101.36 times less return on investment than Insmed. But when comparing it to its historical volatility, Intel is 7.99 times less risky than Insmed. It trades about 0.01 of its potential returns per unit of risk. Insmed Inc is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,500  in Insmed Inc on April 28, 2024 and sell it today you would earn a total of  4,954  from holding Insmed Inc or generate 198.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Intel  vs.  Insmed Inc

Intel

Risk-Adjusted Performance

0 of 100

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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Insmed Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Insmed Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Insmed displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intel and Insmed

The main advantage of trading using opposite Intel and Insmed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, Insmed 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 Insmed will offset losses from the drop in Insmed's long position.

The idea behind Intel and Insmed Inc 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.