Correlation Between Nasdaq and Intel
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
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 Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Nasdaq Inc vs. Intel
Performance |
Timeline |
Nasdaq Inc |
Intel |
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.Nasdaq vs. FactSet Research Systems | Nasdaq vs. Intercontinental Exchange | Nasdaq vs. Moodys | Nasdaq vs. Quotemedia |
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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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
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