Correlation Between Intel and United Parcel
Can any of the company-specific risk be diversified away by investing in both Intel and United Parcel 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 United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel and United Parcel Service, you can compare the effects of market volatilities on Intel and United Parcel 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 United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and United Parcel.
Diversification Opportunities for Intel and United Parcel
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Intel and United is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Intel and United Parcel Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parcel Service 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 United Parcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parcel Service has no effect on the direction of Intel i.e., Intel and United Parcel go up and down completely randomly.
Pair Corralation between Intel and United Parcel
Given the investment horizon of 90 days Intel is expected to under-perform the United Parcel. In addition to that, Intel is 1.18 times more volatile than United Parcel Service. It trades about -0.33 of its total potential returns per unit of risk. United Parcel Service is currently generating about -0.16 per unit of volatility. If you would invest 15,476 in United Parcel Service on January 20, 2024 and sell it today you would lose (1,202) from holding United Parcel Service or give up 7.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intel vs. United Parcel Service
Performance |
| Timeline |
| Intel |
| United Parcel Service |
Intel and United Parcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intel and United Parcel
The main advantage of trading using opposite Intel and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel position performs unexpectedly, United Parcel 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 United Parcel will offset losses from the drop in United Parcel's long position.| Intel vs. NVIDIA | Intel vs. Taiwan Semiconductor Manufacturing | Intel vs. Marvell Technology Group | Intel vs. Micron Technology |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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