Correlation Between Starbucks and Identiv

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

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

Diversification Opportunities for Starbucks and Identiv

0.55

Correlation Coefficient

Starbucks  Identiv

Very weak diversification

The 3 months correlation between Starbucks and Identiv is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Starbucks and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv and Starbucks 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 Starbucks 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 Starbucks i.e., Starbucks and Identiv go up and down completely randomly.

Pair Corralation between Starbucks and Identiv

Assuming the 90 days trading horizon Starbucks is expected to generate 2.39 times less return on investment than Identiv. But when comparing it to its historical volatility, Starbucks is 2.09 times less risky than Identiv. It trades about 0.05 of its potential returns per unit of risk. Identiv is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  331.00  in Identiv on October 23, 2024 and sell it today you would earn a total of  26.00  from holding Identiv or generate 7.85% return on investment over 90 days.

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

Starbucks  vs.  Identiv

Starbucks

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Starbucks are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, Starbucks is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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 Starbucks and Identiv

The main advantage of trading using opposite Starbucks and Identiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Starbucks 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 Starbucks 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.