Correlation Between Cap ISR and Identiv

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

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

Diversification Opportunities for Cap ISR and Identiv

-0.5

Correlation Coefficient

Cap ISR  Identiv

Very good diversification

The 3 months correlation between Cap and Identiv is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Cap ISR Actions and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv and Cap ISR 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 Cap ISR Actions are associated (or correlated) with Identiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Identiv has no effect on the direction of Cap ISR i.e., Cap ISR and Identiv go up and down completely randomly.

Pair Corralation between Cap ISR and Identiv

Assuming the 90 days trading horizon Cap ISR Actions is expected to generate 0.2 times more return on investment than Identiv. However, Cap ISR Actions is 4.95 times less risky than Identiv. It trades about 0.18 of its potential returns per unit of risk. Identiv is currently generating about -0.05 per unit of risk. If you would invest  588.00  in Cap ISR Actions on September 22, 2024 and sell it today you would earn a total of  16.00  from holding Cap ISR Actions or generate 2.72% return on investment over 90 days.

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

Cap ISR Actions  vs.  Identiv

Cap ISR Actions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cap ISR Actions has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Cap ISR is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Identiv

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Identiv are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Identiv may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cap ISR and Identiv

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

The idea behind Cap ISR Actions and Identiv 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.