Correlation Between Dow Jones and Identiv
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Identiv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Identiv, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Identiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Identiv.
Diversification Opportunities for Dow Jones and Identiv
Very poor diversification
The 3 months correlation between Dow and Identiv is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv and Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and Identiv go up and down completely randomly.
Pair Corralation between Dow Jones and Identiv
Assuming the 90 days trading horizon Dow Jones is expected to generate 3.11 times less return on investment than Identiv. But when comparing it to its historical volatility, Dow Jones Industrial is 3.34 times less risky than Identiv. It trades about 0.22 of its potential returns per unit of risk. Identiv is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 348.00 in Identiv on August 27, 2024 and sell it today you would earn a total of 48.00 from holding Identiv or generate 13.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Identiv
Performance |
| Timeline |
Dow Jones and Identiv Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Identiv
Pair trading matchups for Identiv
Pair Trading with Dow Jones and Identiv
The main advantage of trading using opposite Dow Jones and Identiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
| Identiv vs. TransAct Technologies Incorporated | Identiv vs. AGM Group Holdings | Identiv vs. AstroNova | Identiv vs. Key Tronic |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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