Correlation Between EDP Renováveis and Identiv
Can any of the company-specific risk be diversified away by investing in both EDP Renováveis 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 EDP Renováveis and Identiv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EDP Renovveis SA and Identiv, you can compare the effects of market volatilities on EDP Renováveis 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 EDP Renováveis with a short position of Identiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of EDP Renováveis and Identiv.
Diversification Opportunities for EDP Renováveis and Identiv
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between EDP and Identiv is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding EDP Renovveis SA and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv and EDP Renováveis 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 EDP Renovveis SA 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 EDP Renováveis i.e., EDP Renováveis and Identiv go up and down completely randomly.
Pair Corralation between EDP Renováveis and Identiv
Assuming the 90 days horizon EDP Renovveis SA is expected to under-perform the Identiv. But the stock apears to be less risky and, when comparing its historical volatility, EDP Renovveis SA is 1.91 times less risky than Identiv. The stock trades about -0.05 of its potential returns per unit of risk. The Identiv is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 675.00 in Identiv on September 4, 2024 and sell it today you would lose (315.00) from holding Identiv or give up 46.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EDP Renovveis SA vs. Identiv
Performance |
| Timeline |
| EDP Renovveis SA |
| Identiv |
EDP Renováveis and Identiv Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EDP Renováveis and Identiv
The main advantage of trading using opposite EDP Renováveis and Identiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EDP Renováveis 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.| EDP Renováveis vs. Superior Plus Corp | EDP Renováveis vs. NMI Holdings | EDP Renováveis vs. Origin Agritech | EDP Renováveis vs. SIVERS SEMICONDUCTORS AB |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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