Correlation Between GOODYEAR T and Identiv

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

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

Diversification Opportunities for GOODYEAR T and Identiv

0.29

Correlation Coefficient

GOODYEAR T  Identiv

Modest diversification

The 3 months correlation between GOODYEAR and Identiv is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding GOODYEAR T RUBBER and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv and GOODYEAR T 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 GOODYEAR T RUBBER 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 GOODYEAR T i.e., GOODYEAR T and Identiv go up and down completely randomly.

Pair Corralation between GOODYEAR T and Identiv

Assuming the 90 days trading horizon GOODYEAR T RUBBER is expected to under-perform the Identiv. In addition to that, GOODYEAR T is 1.12 times more volatile than Identiv. It trades about -0.04 of its total potential returns per unit of risk. Identiv is currently generating about -0.02 per unit of volatility. If you would invest  360.00  in Identiv on November 29, 2024 and sell it today you would lose (27.00) from holding Identiv or give up 7.5% of portfolio value over 90 days.

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

GOODYEAR T RUBBER  vs.  Identiv

GOODYEAR T RUBBER

Risk-Adjusted Performance

Very Weak

Over the last 90 days GOODYEAR T RUBBER has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 nearly stable basic indicators, Identiv is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GOODYEAR T and Identiv

The main advantage of trading using opposite GOODYEAR T and Identiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOODYEAR T 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 GOODYEAR T RUBBER 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.