Correlation Between Identiv and Coca-Cola FEMSA

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

By analyzing existing cross correlation between Identiv and Coca Cola FEMSA SAB, you can compare the effects of market volatilities on Identiv and Coca-Cola FEMSA 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 Coca-Cola FEMSA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Identiv and Coca-Cola FEMSA.

Diversification Opportunities for Identiv and Coca-Cola FEMSA

-0.2

Correlation Coefficient

Identiv  Coca-Cola FEMSA

Good diversification

The 3 months correlation between Identiv and Coca-Cola is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Identiv and Coca Cola FEMSA SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola FEMSA 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 Coca-Cola FEMSA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola FEMSA has no effect on the direction of Identiv i.e., Identiv and Coca-Cola FEMSA go up and down completely randomly.

Pair Corralation between Identiv and Coca-Cola FEMSA

Assuming the 90 days trading horizon Identiv is expected to under-perform the Coca-Cola FEMSA. But the stock apears to be less risky and, when comparing its historical volatility, Identiv is 1.16 times less risky than Coca-Cola FEMSA. The stock trades about -0.02 of its potential returns per unit of risk. The Coca Cola FEMSA SAB is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  725.00  in Coca Cola FEMSA SAB on November 29, 2024 and sell it today you would earn a total of  100.00  from holding Coca Cola FEMSA SAB or generate 13.79% return on investment over 90 days.

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

Identiv  vs.  Coca Cola FEMSA SAB

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.

Coca Cola FEMSA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola FEMSA SAB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Coca-Cola FEMSA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Identiv and Coca-Cola FEMSA

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

The idea behind Identiv and Coca Cola FEMSA SAB 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.