Correlation Between ASSA ABLOY and Identiv
Can any of the company-specific risk be diversified away by investing in both ASSA ABLOY 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 ASSA ABLOY and Identiv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASSA ABLOY AB and Identiv, you can compare the effects of market volatilities on ASSA ABLOY 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 ASSA ABLOY with a short position of Identiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASSA ABLOY and Identiv.
Diversification Opportunities for ASSA ABLOY and Identiv
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ASSA and Identiv is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding ASSA ABLOY AB and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv and ASSA ABLOY 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 ASSA ABLOY AB 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 ASSA ABLOY i.e., ASSA ABLOY and Identiv go up and down completely randomly.
Pair Corralation between ASSA ABLOY and Identiv
Assuming the 90 days trading horizon ASSA ABLOY AB is expected to generate 0.39 times more return on investment than Identiv. However, ASSA ABLOY AB is 2.58 times less risky than Identiv. It trades about 0.09 of its potential returns per unit of risk. Identiv is currently generating about -0.02 per unit of risk. If you would invest 1,412 in ASSA ABLOY AB on October 16, 2024 and sell it today you would earn a total of 1,365 from holding ASSA ABLOY AB or generate 96.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
ASSA ABLOY AB vs. Identiv
Performance |
Timeline |
ASSA ABLOY AB |
Identiv |
ASSA ABLOY and Identiv Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ASSA ABLOY and Identiv
The main advantage of trading using opposite ASSA ABLOY and Identiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASSA ABLOY 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.ASSA ABLOY vs. SIDETRADE EO 1 | ASSA ABLOY vs. Tencent Music Entertainment | ASSA ABLOY vs. KENEDIX OFFICE INV | ASSA ABLOY vs. Zoom Video Communications |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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