Correlation Between Nasdaq and Intel

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Can any of the company-specific risk be diversified away by investing in both Nasdaq 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 Nasdaq and Intel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Intel, you can compare the effects of market volatilities on Nasdaq 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 Nasdaq with a short position of Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Intel.

Diversification Opportunities for Nasdaq and Intel

-0.22
  Correlation Coefficient

Very good diversification

The 3 months correlation between Nasdaq and Intel is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and Nasdaq 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 Nasdaq Inc 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 Nasdaq i.e., Nasdaq and Intel go up and down completely randomly.

Pair Corralation between Nasdaq and Intel

Given the investment horizon of 90 days Nasdaq is expected to generate 1.96 times less return on investment than Intel. But when comparing it to its historical volatility, Nasdaq Inc is 1.67 times less risky than Intel. It trades about 0.05 of its potential returns per unit of risk. Intel is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,244  in Intel on December 29, 2023 and sell it today you would earn a total of  1,133  from holding Intel or generate 34.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Nasdaq Inc  vs.  Intel

 Performance 
       Timeline  
Nasdaq Inc 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Intel 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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 latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Nasdaq and Intel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nasdaq and Intel

The main advantage of trading using opposite Nasdaq and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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.
The idea behind Nasdaq Inc and Intel 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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.

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