Correlation Between Intel Corp and Microchip Technology

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Intel Corp and Microchip Technology 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 Microchip Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel Corp and Microchip Technology, you can compare the effects of market volatilities on Intel Corp and Microchip Technology 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 Microchip Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel Corp and Microchip Technology.

Diversification Opportunities for Intel Corp and Microchip Technology

0.39
  Correlation Coefficient

Weak diversification

The 3 months correlation between Intel and Microchip is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Intel Corp and Microchip Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microchip Technology 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 Microchip Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microchip Technology has no effect on the direction of Intel Corp i.e., Intel Corp and Microchip Technology go up and down completely randomly.

Pair Corralation between Intel Corp and Microchip Technology

Given the investment horizon of 90 days Intel Corp is expected to under-perform the Microchip Technology. But the stock apears to be less risky and, when comparing its historical volatility, Intel Corp is 1.21 times less risky than Microchip Technology. The stock trades about -0.09 of its potential returns per unit of risk. The Microchip Technology is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  7,697  in Microchip Technology on May 17, 2022 and sell it today you would lose (269.00)  from holding Microchip Technology or give up 3.49% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Intel Corp  vs.  Microchip Technology

 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 conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in September 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Intel Price Channel

Microchip Technology 
Microchip Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Microchip Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical indicators, Microchip Technology may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Microchip Price Channel

Intel Corp and Microchip Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Intel Corp and Microchip Technology

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

Intel Corp

Pair trading matchups for Intel Corp

The idea behind Intel Corp and Microchip Technology 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.

Microchip Technology

Pair trading matchups for Microchip Technology

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

Other Complementary Tools

Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Go
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Go
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Go
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Go
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Go