Correlation Between Dillards and Identiv

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

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

Diversification Opportunities for Dillards and Identiv

0.42

Correlation Coefficient

Dillards  Identiv

Very weak diversification

The 3 months correlation between Dillards and Identiv is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Dillards and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv and Dillards 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 Dillards 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 Dillards i.e., Dillards and Identiv go up and down completely randomly.

Pair Corralation between Dillards and Identiv

Assuming the 90 days trading horizon Dillards is expected to generate 0.91 times more return on investment than Identiv. However, Dillards is 1.1 times less risky than Identiv. It trades about 0.21 of its potential returns per unit of risk. Identiv is currently generating about 0.08 per unit of risk. If you would invest  31,439  in Dillards on October 8, 2024 and sell it today you would earn a total of  12,161  from holding Dillards or generate 38.68% return on investment over 90 days.

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

Dillards  vs.  Identiv

Dillards

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dillards are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Dillards 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 Dillards and Identiv

The main advantage of trading using opposite Dillards and Identiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dillards 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 Dillards 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.