Correlation Between Identiv and Applied Materials
Can any of the company-specific risk be diversified away by investing in both Identiv and Applied Materials 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 Identiv and Applied Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Identiv and Applied Materials, you can compare the effects of market volatilities on Identiv and Applied Materials 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 Identiv with a short position of Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Identiv and Applied Materials.
Diversification Opportunities for Identiv and Applied Materials
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Identiv and Applied is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Identiv and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials and Identiv 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 Identiv are associated (or correlated) with Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of Identiv i.e., Identiv and Applied Materials go up and down completely randomly.
Pair Corralation between Identiv and Applied Materials
Assuming the 90 days trading horizon Identiv is expected to under-perform the Applied Materials. In addition to that, Identiv is 1.74 times more volatile than Applied Materials. It trades about 0.0 of its total potential returns per unit of risk. Applied Materials is currently generating about 0.05 per unit of volatility. If you would invest 11,010 in Applied Materials on August 25, 2024 and sell it today you would earn a total of 4,856 from holding Applied Materials or generate 44.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Identiv vs. Applied Materials
Performance |
| Timeline |
| Identiv |
| Applied Materials |
Identiv and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Identiv and Applied Materials
The main advantage of trading using opposite Identiv and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Identiv position performs unexpectedly, Applied Materials 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 Applied Materials will offset losses from the drop in Applied Materials' long position.| Identiv vs. MIRAMAR HOTEL INV | Identiv vs. DALATA HOTEL | Identiv vs. Hyatt Hotels | Identiv vs. MHP Hotel AG |
| Applied Materials vs. Beazer Homes USA | Applied Materials vs. INVITATION HOMES DL | Applied Materials vs. SOUTHWEST AIRLINES | Applied Materials vs. HomeToGo SE |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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