Correlation Between Intel and Small Company

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

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

Diversification Opportunities for Intel and Small Company

0.77

Correlation Coefficient

Intel  Small Company

Poor diversification

The 3 months correlation between Intel and Small is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Small Pany Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Pany Fund 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 Small Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Pany Fund has no effect on the direction of Intel i.e., Intel and Small Company go up and down completely randomly.

Pair Corralation between Intel and Small Company

Given the investment horizon of 90 days Intel is expected to generate 3.28 times less return on investment than Small Company. In addition to that, Intel is 2.35 times more volatile than Small Pany Fund. It trades about 0.02 of its total potential returns per unit of risk. Small Pany Fund is currently generating about 0.15 per unit of volatility. If you would invest  2,680  in Small Pany Fund on April 28, 2025 and sell it today you would earn a total of  301.00  from holding Small Pany Fund or generate 11.23% return on investment over 90 days.

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

Intel  vs.  Small Pany Fund

Intel

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Intel is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Small Pany Fund

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Small Pany Fund are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Small Company may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Intel and Small Company

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

The idea behind Intel and Small Pany Fund 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.