Correlation Between Intel Corp and Amazon

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Can any of the company-specific risk be diversified away by investing in both Intel Corp and Amazon 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 Corp and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel Corp and Amazon Inc, you can compare the effects of market volatilities on Intel Corp and Amazon 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 Corp with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel Corp and Amazon.

Diversification Opportunities for Intel Corp and Amazon

-0.2
  Correlation Coefficient

Good diversification

The 3 months correlation between Intel and Amazon is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Intel Corp and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Intel Corp 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 Corp are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Intel Corp i.e., Intel Corp and Amazon go up and down completely randomly.

Pair Corralation between Intel Corp and Amazon

Given the investment horizon of 90 days Intel Corp is expected to under-perform the Amazon. But the stock apears to be less risky and, when comparing its historical volatility, Intel Corp is 1.09 times less risky than Amazon. The stock trades about -0.04 of its potential returns per unit of risk. The Amazon Inc is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  15,996  in Amazon Inc on June 27, 2022 and sell it today you would lose (4,618)  from holding Amazon Inc or give up 28.87% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Intel Corp  vs.  Amazon Inc

 Performance (%) 
       Timeline  
Intel Corp 
Intel Performance
0 of 100
Over the last 90 days Intel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in October 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Intel Price Channel

Amazon Inc 
Amazon Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Amazon is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Amazon Price Channel

Intel Corp and Amazon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Intel Corp and Amazon

The main advantage of trading using opposite Intel Corp and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel Corp position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.
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The idea behind Intel Corp and Amazon Inc 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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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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