Correlation Between Aqua America and Identiv
Can any of the company-specific risk be diversified away by investing in both Aqua America 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 Aqua America and Identiv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqua America and Identiv, you can compare the effects of market volatilities on Aqua America 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 Aqua America with a short position of Identiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqua America and Identiv.
Diversification Opportunities for Aqua America and Identiv
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aqua and Identiv is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Aqua America and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv and Aqua America 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 Aqua America 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 Aqua America i.e., Aqua America and Identiv go up and down completely randomly.
Pair Corralation between Aqua America and Identiv
Assuming the 90 days horizon Aqua America is expected to generate 1.51 times less return on investment than Identiv. But when comparing it to its historical volatility, Aqua America is 1.73 times less risky than Identiv. It trades about 0.19 of its potential returns per unit of risk. Identiv is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 325.00 in Identiv on September 3, 2024 and sell it today you would earn a total of 35.00 from holding Identiv or generate 10.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqua America vs. Identiv
Performance |
| Timeline |
| Aqua America |
| Identiv |
Aqua America and Identiv Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqua America and Identiv
The main advantage of trading using opposite Aqua America and Identiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqua America 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.| Aqua America vs. United Utilities Group | Aqua America vs. Guangdong Investment Limited | Aqua America vs. Superior Plus Corp | Aqua America vs. NMI Holdings |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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