Correlation Between Identiv and CENTRICA ADR

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

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

Diversification Opportunities for Identiv and CENTRICA ADR

-0.52

Correlation Coefficient

Identiv  CENTRICA ADR

Excellent diversification

The 3 months correlation between Identiv and CENTRICA is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Identiv and CENTRICA ADR NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CENTRICA ADR NEW and Identiv 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 Identiv are associated (or correlated) with CENTRICA ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CENTRICA ADR NEW has no effect on the direction of Identiv i.e., Identiv and CENTRICA ADR go up and down completely randomly.

Pair Corralation between Identiv and CENTRICA ADR

Assuming the 90 days trading horizon Identiv is expected to under-perform the CENTRICA ADR. In addition to that, Identiv is 1.53 times more volatile than CENTRICA ADR NEW. It trades about -0.02 of its total potential returns per unit of risk. CENTRICA ADR NEW is currently generating about 0.14 per unit of volatility. If you would invest  595.00  in CENTRICA ADR NEW on November 29, 2024 and sell it today you would earn a total of  105.00  from holding CENTRICA ADR NEW or generate 17.65% return on investment over 90 days.

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

Identiv  vs.  CENTRICA ADR NEW

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.

CENTRICA ADR NEW

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CENTRICA ADR NEW are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CENTRICA ADR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Identiv and CENTRICA ADR

The main advantage of trading using opposite Identiv and CENTRICA ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Identiv position performs unexpectedly, CENTRICA ADR 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 CENTRICA ADR will offset losses from the drop in CENTRICA ADR's long position.

The idea behind Identiv and CENTRICA ADR NEW 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.