Correlation Between Key Tronic and Identiv

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

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

Diversification Opportunities for Key Tronic and Identiv

0.76

Correlation Coefficient

Key Tronic  Identiv

Poor diversification

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

Pair Corralation between Key Tronic and Identiv

Given the investment horizon of 90 days Key Tronic is expected to under-perform the Identiv. In addition to that, Key Tronic is 1.22 times more volatile than Identiv. It trades about -0.22 of its total potential returns per unit of risk. Identiv is currently generating about -0.06 per unit of volatility. If you would invest  373.00  in Identiv on December 28, 2024 and sell it today you would lose (44.00) from holding Identiv or give up 11.8% of portfolio value over 90 days.

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

Key Tronic  vs.  Identiv

Key Tronic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Key Tronic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Key Tronic and Identiv

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

The idea behind Key Tronic and Identiv 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.