Correlation Between Identiv and Prudential Financial

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

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

Diversification Opportunities for Identiv and Prudential Financial

0.76

Correlation Coefficient

Identiv  Prudential Financial

Poor diversification

The 3 months correlation between Identiv and Prudential is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Identiv and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial 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 Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial has no effect on the direction of Identiv i.e., Identiv and Prudential Financial go up and down completely randomly.

Pair Corralation between Identiv and Prudential Financial

Assuming the 90 days trading horizon Identiv is expected to generate 2.28 times more return on investment than Prudential Financial. However, Identiv is 2.28 times more volatile than Prudential Financial. It trades about -0.04 of its potential returns per unit of risk. Prudential Financial is currently generating about -0.09 per unit of risk. If you would invest  354.00  in Identiv on December 24, 2024 and sell it today you would lose (41.00) from holding Identiv or give up 11.58% of portfolio value over 90 days.

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

Identiv  vs.  Prudential Financial

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Prudential Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prudential Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Identiv and Prudential Financial

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

The idea behind Identiv and Prudential Financial 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 Stocks Directory module to find actively traded stocks across global markets.