Correlation Between Identiv and Telefonaktiebolaget
Can any of the company-specific risk be diversified away by investing in both Identiv and Telefonaktiebolaget 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 Telefonaktiebolaget into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Identiv and Telefonaktiebolaget LM Ericsson, you can compare the effects of market volatilities on Identiv and Telefonaktiebolaget 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 Telefonaktiebolaget. Check out your portfolio center. Please also check ongoing floating volatility patterns of Identiv and Telefonaktiebolaget.
Diversification Opportunities for Identiv and Telefonaktiebolaget
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Identiv and Telefonaktiebolaget is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Identiv and Telefonaktiebolaget LM Ericsso in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonaktiebolaget 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 Telefonaktiebolaget. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefonaktiebolaget has no effect on the direction of Identiv i.e., Identiv and Telefonaktiebolaget go up and down completely randomly.
Pair Corralation between Identiv and Telefonaktiebolaget
Assuming the 90 days trading horizon Identiv is expected to under-perform the Telefonaktiebolaget. In addition to that, Identiv is 1.24 times more volatile than Telefonaktiebolaget LM Ericsson. It trades about -0.02 of its total potential returns per unit of risk. Telefonaktiebolaget LM Ericsson is currently generating about 0.11 per unit of volatility. If you would invest 224.00 in Telefonaktiebolaget LM Ericsson on August 31, 2024 and sell it today you would earn a total of 546.00 from holding Telefonaktiebolaget LM Ericsson or generate 243.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Identiv vs. Telefonaktiebolaget LM Ericsso
Performance |
| Timeline |
| Identiv |
| Telefonaktiebolaget |
Identiv and Telefonaktiebolaget Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Identiv and Telefonaktiebolaget
The main advantage of trading using opposite Identiv and Telefonaktiebolaget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Identiv position performs unexpectedly, Telefonaktiebolaget 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 Telefonaktiebolaget will offset losses from the drop in Telefonaktiebolaget's long position.| Identiv vs. SANOK RUBBER ZY | Identiv vs. WisdomTree Investments | Identiv vs. GOODYEAR T RUBBER | Identiv vs. Materialise NV |
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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 Stocks Directory module to find actively traded stocks across global markets.
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