Correlation Between Intel and Nova

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

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

Diversification Opportunities for Intel and Nova

0.63

Correlation Coefficient

Intel  Nova

Poor diversification

The 3 months correlation between Intel and Nova is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Nova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova 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 Nova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova has no effect on the direction of Intel i.e., Intel and Nova go up and down completely randomly.

Pair Corralation between Intel and Nova

Given the investment horizon of 90 days Intel is expected to under-perform the Nova. But the stock apears to be less risky and, when comparing its historical volatility, Intel is 1.06 times less risky than Nova. The stock trades about -0.01 of its potential returns per unit of risk. The Nova is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  19,607  in Nova on May 5, 2025 and sell it today you would earn a total of  6,748  from holding Nova or generate 34.42% return on investment over 90 days.

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

Intel  vs.  Nova

Intel

Risk-Adjusted Performance

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 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.

Nova

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nova are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain primary indicators, Nova demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intel and Nova

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

The idea behind Intel and Nova 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.