Correlation Between Intel and Mid Cap

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

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

Diversification Opportunities for Intel and Mid Cap

-0.34

Correlation Coefficient

Intel  Mid Cap

Very good diversification

The 3 months correlation between Intel and Mid is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Mid Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Growth 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 Mid Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap Growth has no effect on the direction of Intel i.e., Intel and Mid Cap go up and down completely randomly.

Pair Corralation between Intel and Mid Cap

Given the investment horizon of 90 days Intel is expected to under-perform the Mid Cap. In addition to that, Intel is 2.56 times more volatile than Mid Cap Growth. It trades about -0.33 of its total potential returns per unit of risk. Mid Cap Growth is currently generating about -0.26 per unit of volatility. If you would invest  3,651  in Mid Cap Growth on January 20, 2024 and sell it today you would lose (208.00) from holding Mid Cap Growth or give up 5.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Intel  vs.  Mid Cap Growth

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.

Mid Cap Growth

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap Growth are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mid Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Intel and Mid Cap

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

The idea behind Intel and Mid Cap Growth 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.