Correlation Between AECOM and Identiv

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

Diversification Opportunities for AECOM and Identiv

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between AECOM and Identiv is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding AECOM and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv and AECOM 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 AECOM 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 AECOM i.e., AECOM and Identiv go up and down completely randomly.

Pair Corralation between AECOM and Identiv

Assuming the 90 days horizon AECOM is expected to generate 1.13 times less return on investment than Identiv. But when comparing it to its historical volatility, AECOM is 1.15 times less risky than Identiv. It trades about 0.19 of its potential returns per unit of risk. Identiv is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  320.00  in Identiv on September 1, 2024 and sell it today you would earn a total of  42.00  from holding Identiv or generate 13.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy95.65%
ValuesDaily Returns

AECOM  vs.  Identiv

 Performance 
       Timeline  
AECOM 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in AECOM are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, AECOM reported solid returns over the last few months and may actually be approaching a breakup point.
Identiv 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Identiv are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Identiv reported solid returns over the last few months and may actually be approaching a breakup point.

AECOM and Identiv Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AECOM and Identiv

The main advantage of trading using opposite AECOM and Identiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AECOM 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 AECOM 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.
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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