Correlation Between Identiv and HORNBACH Baumarkt

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

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

Diversification Opportunities for Identiv and HORNBACH Baumarkt

0.42

Correlation Coefficient

Identiv  HORNBACH Baumarkt

Very weak diversification

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

Pair Corralation between Identiv and HORNBACH Baumarkt

Assuming the 90 days trading horizon Identiv is expected to generate 2.03 times more return on investment than HORNBACH Baumarkt. However, Identiv is 2.03 times more volatile than HORNBACH Baumarkt AG. It trades about 0.05 of its potential returns per unit of risk. HORNBACH Baumarkt AG is currently generating about 0.11 per unit of risk. If you would invest  331.00  in Identiv on October 23, 2024 and sell it today you would earn a total of  26.00  from holding Identiv or generate 7.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Identiv  vs.  HORNBACH Baumarkt AG

Identiv

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Identiv are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Identiv may actually be approaching a critical reversion point that can send shares even higher in February 2025.

HORNBACH Baumarkt

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HORNBACH Baumarkt AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile primary indicators, HORNBACH Baumarkt may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Identiv and HORNBACH Baumarkt

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

The idea behind Identiv and HORNBACH Baumarkt AG 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.