Correlation Between Vale SA and Identiv

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

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

Diversification Opportunities for Vale SA and Identiv

-0.47

Correlation Coefficient

Vale SA  Identiv

Very good diversification

The 3 months correlation between Vale and Identiv is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv and Vale SA 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 Vale SA 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 Vale SA i.e., Vale SA and Identiv go up and down completely randomly.

Pair Corralation between Vale SA and Identiv

Assuming the 90 days trading horizon Vale SA is expected to generate 0.44 times more return on investment than Identiv. However, Vale SA is 2.29 times less risky than Identiv. It trades about 0.13 of its potential returns per unit of risk. Identiv is currently generating about -0.03 per unit of risk. If you would invest  811.00  in Vale SA on December 20, 2024 and sell it today you would earn a total of  99.00  from holding Vale SA or generate 12.21% return on investment over 90 days.

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

Vale SA  vs.  Identiv

Vale SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vale SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain essential indicators, Vale SA reported solid returns over the last few months and may actually be approaching a breakup point.

Identiv

Risk-Adjusted Performance

Very Weak

Over the last 90 days Identiv has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Vale SA and Identiv

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