Correlation Between Principal Financial and Intel

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

By analyzing existing cross correlation between Principal Financial Group, and Intel, you can compare the effects of market volatilities on Principal Financial and Intel 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 Principal Financial with a short position of Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Principal Financial and Intel.

Diversification Opportunities for Principal Financial and Intel

0.21

Correlation Coefficient

Principal Financial  Intel

Modest diversification

The 3 months correlation between Principal and Intel is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Principal Financial Group, and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and Principal Financial 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 Principal Financial Group, are associated (or correlated) with Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of Principal Financial i.e., Principal Financial and Intel go up and down completely randomly.

Pair Corralation between Principal Financial and Intel

Assuming the 90 days trading horizon Principal Financial is expected to generate 15.13 times less return on investment than Intel. But when comparing it to its historical volatility, Principal Financial Group, is 21.49 times less risky than Intel. It trades about 0.13 of its potential returns per unit of risk. Intel is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,928  in Intel on April 24, 2025 and sell it today you would earn a total of  241.00  from holding Intel or generate 12.5% return on investment over 90 days.

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

Principal Financial Group,  vs.  Intel

Principal Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Principal Financial Group, are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Principal Financial is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Intel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Intel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Principal Financial and Intel

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

The idea behind Principal Financial Group, and Intel 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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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.