Correlation Between Coca-Cola FEMSA and Identiv

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Can any of the company-specific risk be diversified away by investing in both Coca-Cola FEMSA 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 Coca-Cola FEMSA and Identiv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coca Cola FEMSA SAB and Identiv, you can compare the effects of market volatilities on Coca-Cola FEMSA 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 Coca-Cola FEMSA with a short position of Identiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca-Cola FEMSA and Identiv.

Diversification Opportunities for Coca-Cola FEMSA and Identiv

-0.32
  Correlation Coefficient

Very good diversification

The 3 months correlation between Coca-Cola and Identiv is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola FEMSA SAB and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv and Coca-Cola FEMSA 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 Coca Cola FEMSA SAB 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 Coca-Cola FEMSA i.e., Coca-Cola FEMSA and Identiv go up and down completely randomly.

Pair Corralation between Coca-Cola FEMSA and Identiv

Assuming the 90 days trading horizon Coca Cola FEMSA SAB is expected to under-perform the Identiv. But the stock apears to be less risky and, when comparing its historical volatility, Coca Cola FEMSA SAB is 2.22 times less risky than Identiv. The stock trades about -0.19 of its potential returns per unit of risk. The Identiv is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  322.00  in Identiv on August 28, 2024 and sell it today you would earn a total of  49.00  from holding Identiv or generate 15.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Coca Cola FEMSA SAB  vs.  Identiv

 Performance 
       Timeline  
Coca Cola FEMSA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Coca Cola FEMSA SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Coca-Cola FEMSA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Identiv 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Identiv are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Identiv reported solid returns over the last few months and may actually be approaching a breakup point.

Coca-Cola FEMSA and Identiv Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Coca-Cola FEMSA and Identiv

The main advantage of trading using opposite Coca-Cola FEMSA and Identiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca-Cola FEMSA 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 Coca Cola FEMSA SAB 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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