Correlation Between AutoZone and Identiv

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

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

Diversification Opportunities for AutoZone and Identiv

0.76

Correlation Coefficient

AutoZone  Identiv

Poor diversification

The 3 months correlation between AutoZone and Identiv is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding AutoZone and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv and AutoZone 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 AutoZone 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 AutoZone i.e., AutoZone and Identiv go up and down completely randomly.

Pair Corralation between AutoZone and Identiv

Assuming the 90 days horizon AutoZone is expected to generate 3.43 times less return on investment than Identiv. But when comparing it to its historical volatility, AutoZone is 1.84 times less risky than Identiv. It trades about 0.06 of its potential returns per unit of risk. Identiv is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  297.00  in Identiv on September 3, 2024 and sell it today you would earn a total of  63.00  from holding Identiv or generate 21.21% return on investment over 90 days.

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

AutoZone  vs.  Identiv

AutoZone

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AutoZone are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AutoZone is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Identiv

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Identiv are ranked lower than 9 (%) 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 AutoZone and Identiv

The main advantage of trading using opposite AutoZone and Identiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AutoZone 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 AutoZone 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.

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 the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.