Correlation Between Identiv and ConocoPhillips

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

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

Diversification Opportunities for Identiv and ConocoPhillips

-0.02

Correlation Coefficient

Identiv  ConocoPhillips

Good diversification

The 3 months correlation between Identiv and ConocoPhillips is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Identiv and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips 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 ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of Identiv i.e., Identiv and ConocoPhillips go up and down completely randomly.

Pair Corralation between Identiv and ConocoPhillips

Assuming the 90 days trading horizon Identiv is expected to generate 2.13 times more return on investment than ConocoPhillips. However, Identiv is 2.13 times more volatile than ConocoPhillips. It trades about 0.07 of its potential returns per unit of risk. ConocoPhillips is currently generating about -0.06 per unit of risk. If you would invest  350.00  in Identiv on October 20, 2024 and sell it today you would earn a total of  27.00  from holding Identiv or generate 7.71% return on investment over 90 days.

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

Identiv  vs.  ConocoPhillips

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 unsteady basic indicators, Identiv reported solid returns over the last few months and may actually be approaching a breakup point.

ConocoPhillips

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Identiv and ConocoPhillips

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

The idea behind Identiv and ConocoPhillips 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.