Correlation Between Intel Corp and General Electric

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

Diversification Opportunities for Intel Corp and General Electric

0.37
  Correlation Coefficient

Weak diversification

The 3 months correlation between Intel and General is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Intel Corp and General Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Electric 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 General Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Electric has no effect on the direction of Intel Corp i.e., Intel Corp and General Electric go up and down completely randomly.

Pair Corralation between Intel Corp and General Electric

Given the investment horizon of 90 days Intel Corp is expected to under-perform the General Electric. But the stock apears to be less risky and, when comparing its historical volatility, Intel Corp is 1.09 times less risky than General Electric. The stock trades about -0.02 of its potential returns per unit of risk. The General Electric is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5,247  in General Electric on May 20, 2022 and sell it today you would earn a total of  2,674  from holding General Electric or generate 50.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Intel Corp  vs.  General Electric

 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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Intel Price Channel

General Electric 
General Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in General Electric are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, General Electric may actually be approaching a critical reversion point that can send shares even higher in September 2022.

General Price Channel

Intel Corp and General Electric Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Intel Corp and General Electric

The main advantage of trading using opposite Intel Corp and General Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel Corp position performs unexpectedly, General Electric 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 General Electric will offset losses from the drop in General Electric's long position.
The idea behind Intel Corp and General Electric 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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