Correlation Between United Parcel and Intel

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

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

Diversification Opportunities for United Parcel and Intel

0.48

Correlation Coefficient

United Parcel  Intel

Very weak diversification

The 3 months correlation between United and Intel is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding United Parcel Service and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and United Parcel 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 United Parcel Service 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 United Parcel i.e., United Parcel and Intel go up and down completely randomly.

Pair Corralation between United Parcel and Intel

Considering the 90-day investment horizon United Parcel Service is expected to under-perform the Intel. But the stock apears to be less risky and, when comparing its historical volatility, United Parcel Service is 1.59 times less risky than Intel. The stock trades about -0.03 of its potential returns per unit of risk. The Intel is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,459  in Intel on January 24, 2024 and sell it today you would earn a total of  982.00  from holding Intel or generate 39.93% return on investment over 90 days.

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

United Parcel Service  vs.  Intel

United Parcel Service

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Parcel Service has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, United Parcel is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Intel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with United Parcel and Intel

The main advantage of trading using opposite United Parcel and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Parcel 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 United Parcel Service 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.