Correlation Between Broadcom and INTEL CDR

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

By analyzing existing cross correlation between Broadcom and INTEL CDR, you can compare the effects of market volatilities on Broadcom and INTEL CDR 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 Broadcom with a short position of INTEL CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadcom and INTEL CDR.

Diversification Opportunities for Broadcom and INTEL CDR

0.25

Correlation Coefficient

Broadcom  INTEL CDR

Modest diversification

The 3 months correlation between Broadcom and INTEL is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Broadcom and INTEL CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTEL CDR and Broadcom 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 Broadcom are associated (or correlated) with INTEL CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTEL CDR has no effect on the direction of Broadcom i.e., Broadcom and INTEL CDR go up and down completely randomly.

Pair Corralation between Broadcom and INTEL CDR

Assuming the 90 days trading horizon Broadcom is expected to generate 0.6 times more return on investment than INTEL CDR. However, Broadcom is 1.65 times less risky than INTEL CDR. It trades about 0.26 of its potential returns per unit of risk. INTEL CDR is currently generating about 0.09 per unit of risk. If you would invest  5,444  in Broadcom on May 19, 2025 and sell it today you would earn a total of  1,749  from holding Broadcom or generate 32.13% return on investment over 90 days.

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

Broadcom  vs.  INTEL CDR

Broadcom

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Broadcom are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Broadcom exhibited solid returns over the last few months and may actually be approaching a breakup point.

INTEL CDR

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in INTEL CDR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, INTEL CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Broadcom and INTEL CDR

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

The idea behind Broadcom and INTEL CDR 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.