Correlation Between Identiv and Dillards

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

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

Diversification Opportunities for Identiv and Dillards

0.42

Correlation Coefficient

Identiv  Dillards

Very weak diversification

The 3 months correlation between Identiv and Dillards is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Identiv and Dillards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dillards 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 Dillards. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dillards has no effect on the direction of Identiv i.e., Identiv and Dillards go up and down completely randomly.

Pair Corralation between Identiv and Dillards

Assuming the 90 days trading horizon Identiv is expected to generate 2.32 times less return on investment than Dillards. In addition to that, Identiv is 1.1 times more volatile than Dillards. It trades about 0.08 of its total potential returns per unit of risk. Dillards is currently generating about 0.21 per unit of volatility. 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

Identiv  vs.  Dillards

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.

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.

Pair Trading with Identiv and Dillards

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

The idea behind Identiv and Dillards 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.