Correlation Between Nintendo and Identiv

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

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

Diversification Opportunities for Nintendo and Identiv

-0.36

Correlation Coefficient

Nintendo  Identiv

Very good diversification

The 3 months correlation between Nintendo and Identiv is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Nintendo Co and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv and Nintendo 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 Nintendo Co 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 Nintendo i.e., Nintendo and Identiv go up and down completely randomly.

Pair Corralation between Nintendo and Identiv

Assuming the 90 days horizon Nintendo Co is expected to generate 0.78 times more return on investment than Identiv. However, Nintendo Co is 1.29 times less risky than Identiv. It trades about 0.1 of its potential returns per unit of risk. Identiv is currently generating about -0.05 per unit of risk. If you would invest  5,622  in Nintendo Co on December 30, 2024 and sell it today you would earn a total of  978.00  from holding Nintendo Co or generate 17.4% return on investment over 90 days.

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

Nintendo Co  vs.  Identiv

Nintendo

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nintendo Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nintendo reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Nintendo and Identiv

The main advantage of trading using opposite Nintendo and Identiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nintendo 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 Nintendo Co 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.