Correlation Between Identiv and Commerzbank

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

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

Diversification Opportunities for Identiv and Commerzbank

-0.7

Correlation Coefficient

Identiv  Commerzbank

Excellent diversification

The 3 months correlation between Identiv and Commerzbank is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Identiv and Commerzbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerzbank AG 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 Commerzbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerzbank AG has no effect on the direction of Identiv i.e., Identiv and Commerzbank go up and down completely randomly.

Pair Corralation between Identiv and Commerzbank

Assuming the 90 days trading horizon Identiv is expected to under-perform the Commerzbank. In addition to that, Identiv is 1.35 times more volatile than Commerzbank AG. It trades about -0.03 of its total potential returns per unit of risk. Commerzbank AG is currently generating about 0.26 per unit of volatility. If you would invest  1,520  in Commerzbank AG on December 26, 2024 and sell it today you would earn a total of  760.00  from holding Commerzbank AG or generate 50.0% return on investment over 90 days.

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

Identiv  vs.  Commerzbank AG

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.

Commerzbank AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Commerzbank AG are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Commerzbank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Identiv and Commerzbank

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

The idea behind Identiv and Commerzbank 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.