Correlation Between Intel and Knowledge Leaders

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

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

Diversification Opportunities for Intel and Knowledge Leaders

0.65

Correlation Coefficient

Intel  Knowledge Leaders

Poor diversification

The 3 months correlation between Intel and Knowledge is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Knowledge Leaders Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knowledge Leaders 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 Knowledge Leaders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knowledge Leaders has no effect on the direction of Intel i.e., Intel and Knowledge Leaders go up and down completely randomly.

Pair Corralation between Intel and Knowledge Leaders

Given the investment horizon of 90 days Intel is expected to generate 5.31 times more return on investment than Knowledge Leaders. However, Intel is 5.31 times more volatile than Knowledge Leaders Developed. It trades about 0.07 of its potential returns per unit of risk. Knowledge Leaders Developed is currently generating about 0.23 per unit of risk. If you would invest  2,051  in Intel on April 26, 2025 and sell it today you would earn a total of  212.00  from holding Intel or generate 10.34% return on investment over 90 days.

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

Intel  vs.  Knowledge Leaders Developed

Intel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Intel may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Knowledge Leaders

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Knowledge Leaders Developed are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, Knowledge Leaders may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Intel and Knowledge Leaders

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

The idea behind Intel and Knowledge Leaders Developed 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.