Correlation Between Identiv and HeidelbergCement
Can any of the company-specific risk be diversified away by investing in both Identiv and HeidelbergCement 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 HeidelbergCement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Identiv and HeidelbergCement AG, you can compare the effects of market volatilities on Identiv and HeidelbergCement 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 HeidelbergCement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Identiv and HeidelbergCement.
Diversification Opportunities for Identiv and HeidelbergCement
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Identiv and HeidelbergCement is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Identiv and HeidelbergCement AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HeidelbergCement 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 HeidelbergCement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HeidelbergCement has no effect on the direction of Identiv i.e., Identiv and HeidelbergCement go up and down completely randomly.
Pair Corralation between Identiv and HeidelbergCement
Assuming the 90 days trading horizon Identiv is expected to generate 1.03 times less return on investment than HeidelbergCement. In addition to that, Identiv is 1.7 times more volatile than HeidelbergCement AG. It trades about 0.24 of its total potential returns per unit of risk. HeidelbergCement AG is currently generating about 0.42 per unit of volatility. If you would invest 10,000 in HeidelbergCement AG on August 29, 2024 and sell it today you would earn a total of 1,840 from holding HeidelbergCement AG or generate 18.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Identiv vs. HeidelbergCement AG
Performance |
| Timeline |
| Identiv |
| HeidelbergCement |
Identiv and HeidelbergCement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Identiv and HeidelbergCement
The main advantage of trading using opposite Identiv and HeidelbergCement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Identiv position performs unexpectedly, HeidelbergCement 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 HeidelbergCement will offset losses from the drop in HeidelbergCement's long position.| Identiv vs. NIPPON STEEL SPADR | Identiv vs. GFL ENVIRONM | Identiv vs. RELIANCE STEEL AL | Identiv vs. United States Steel |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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