Correlation Between Identiv and TESCO PLC

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

By analyzing existing cross correlation between Identiv and TESCO PLC LS 0633333, you can compare the effects of market volatilities on Identiv and TESCO PLC 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 TESCO PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Identiv and TESCO PLC.

Diversification Opportunities for Identiv and TESCO PLC

0.36

Correlation Coefficient

Identiv  TESCO PLC

Weak diversification

The 3 months correlation between Identiv and TESCO is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Identiv and TESCO PLC LS 0633333 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TESCO PLC LS 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 TESCO PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TESCO PLC LS has no effect on the direction of Identiv i.e., Identiv and TESCO PLC go up and down completely randomly.

Pair Corralation between Identiv and TESCO PLC

Assuming the 90 days trading horizon Identiv is expected to under-perform the TESCO PLC. In addition to that, Identiv is 1.78 times more volatile than TESCO PLC LS 0633333. It trades about -0.05 of its total potential returns per unit of risk. TESCO PLC LS 0633333 is currently generating about -0.06 per unit of volatility. If you would invest  440.00  in TESCO PLC LS 0633333 on December 30, 2024 and sell it today you would lose (40.00) from holding TESCO PLC LS 0633333 or give up 9.09% of portfolio value over 90 days.

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

Identiv  vs.  TESCO PLC LS 0633333

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.

TESCO PLC LS

Risk-Adjusted Performance

Very Weak

Over the last 90 days TESCO PLC LS 0633333 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.

Pair Trading with Identiv and TESCO PLC

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

The idea behind Identiv and TESCO PLC LS 0633333 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.