Correlation Between Intel Corp and Starbucks Corp

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

Diversification Opportunities for Intel Corp and Starbucks Corp

-0.6
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Intel and Starbucks is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Intel Corp and Starbucks Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks Corp 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 Starbucks Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbucks Corp has no effect on the direction of Intel Corp i.e., Intel Corp and Starbucks Corp go up and down completely randomly.

Pair Corralation between Intel Corp and Starbucks Corp

Given the investment horizon of 90 days Intel Corp is expected to under-perform the Starbucks Corp. In addition to that, Intel Corp is 1.15 times more volatile than Starbucks Corp. It trades about -0.04 of its total potential returns per unit of risk. Starbucks Corp is currently generating about 0.0 per unit of volatility. If you would invest  8,949  in Starbucks Corp on June 29, 2022 and sell it today you would lose (468.00)  from holding Starbucks Corp or give up 5.23% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Intel Corp  vs.  Starbucks Corp

 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

Starbucks Corp 
Starbucks Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Starbucks Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Starbucks Corp may actually be approaching a critical reversion point that can send shares even higher in October 2022.

Starbucks Price Channel

Intel Corp and Starbucks Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Intel Corp and Starbucks Corp

The main advantage of trading using opposite Intel Corp and Starbucks Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel Corp position performs unexpectedly, Starbucks Corp 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 Starbucks Corp will offset losses from the drop in Starbucks Corp's long position.
Intel Corp vs. Kibush Capital Corp
The idea behind Intel Corp and Starbucks Corp 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.
Starbucks Corp vs. Kibush Capital Corp
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 Bond Directory module to find actively traded corporate debentures issued by US companies.

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