Correlation Between NVR and Identiv

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

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

Diversification Opportunities for NVR and Identiv

-0.11

Correlation Coefficient

NVR  Identiv

Good diversification

The 3 months correlation between NVR and Identiv is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding NVR Inc and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv and NVR 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 NVR Inc 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 NVR i.e., NVR and Identiv go up and down completely randomly.

Pair Corralation between NVR and Identiv

Assuming the 90 days horizon NVR Inc is expected to generate 0.37 times more return on investment than Identiv. However, NVR Inc is 2.7 times less risky than Identiv. It trades about 0.08 of its potential returns per unit of risk. Identiv is currently generating about -0.01 per unit of risk. If you would invest  488,000  in NVR Inc on October 23, 2024 and sell it today you would earn a total of  322,000  from holding NVR Inc or generate 65.98% return on investment over 90 days.

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

NVR Inc  vs.  Identiv

NVR Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NVR Inc 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.

Identiv

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with NVR and Identiv

The main advantage of trading using opposite NVR and Identiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVR 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 NVR Inc 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 Transaction History module to view history of all your transactions and understand their impact on performance.