Correlation Between Alphabet and Identiv

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

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

Diversification Opportunities for Alphabet and Identiv

0.67

Correlation Coefficient

Alphabet  Identiv

Poor diversification

The 3 months correlation between Alphabet and Identiv is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Class A and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv and Alphabet 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 Alphabet Class A 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 Alphabet i.e., Alphabet and Identiv go up and down completely randomly.

Pair Corralation between Alphabet and Identiv

Assuming the 90 days trading horizon Alphabet Class A is expected to generate 0.87 times more return on investment than Identiv. However, Alphabet Class A is 1.15 times less risky than Identiv. It trades about 0.31 of its potential returns per unit of risk. Identiv is currently generating about -0.08 per unit of risk. If you would invest  16,634  in Alphabet Class A on October 8, 2024 and sell it today you would earn a total of  2,008  from holding Alphabet Class A or generate 12.07% return on investment over 90 days.

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

Alphabet Class A  vs.  Identiv

Alphabet Class A

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Class A are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Alphabet reported solid returns over the last few months and may actually be approaching a breakup point.

Identiv

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Alphabet and Identiv

The main advantage of trading using opposite Alphabet and Identiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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 Alphabet Class A 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.