Correlation Between Intel and SPDR Portfolio

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

By analyzing existing cross correlation between Intel and SPDR Portfolio SP, you can compare the effects of market volatilities on Intel and SPDR Portfolio 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 SPDR Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and SPDR Portfolio.

Diversification Opportunities for Intel and SPDR Portfolio

-0.53

Correlation Coefficient

Intel  SPDR Portfolio

Excellent diversification

The 3 months correlation between Intel and SPDR is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Intel and SPDR Portfolio SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio SP 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 SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio SP has no effect on the direction of Intel i.e., Intel and SPDR Portfolio go up and down completely randomly.

Pair Corralation between Intel and SPDR Portfolio

Given the investment horizon of 90 days Intel is expected to generate 2.94 times more return on investment than SPDR Portfolio. However, Intel is 2.94 times more volatile than SPDR Portfolio SP. It trades about 0.04 of its potential returns per unit of risk. SPDR Portfolio SP is currently generating about 0.12 per unit of risk. If you would invest  2,925  in Intel on January 19, 2024 and sell it today you would earn a total of  643.00  from holding Intel or generate 21.98% return on investment over 90 days.

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

Intel  vs.  SPDR Portfolio SP

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 weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

SPDR Portfolio SP

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Portfolio SP are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SPDR Portfolio is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Intel and SPDR Portfolio

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

The idea behind Intel and SPDR Portfolio SP 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 Stocks Directory module to find actively traded stocks across global markets.