Correlation Between Identiv and Lowes Companies
Can any of the company-specific risk be diversified away by investing in both Identiv and Lowes Companies 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 Lowes Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Identiv and Lowes Companies, you can compare the effects of market volatilities on Identiv and Lowes Companies 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 Lowes Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Identiv and Lowes Companies.
Diversification Opportunities for Identiv and Lowes Companies
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Identiv and Lowes is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Identiv and Lowes Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowes Companies 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 Lowes Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowes Companies has no effect on the direction of Identiv i.e., Identiv and Lowes Companies go up and down completely randomly.
Pair Corralation between Identiv and Lowes Companies
Assuming the 90 days trading horizon Identiv is expected to generate 11.3 times less return on investment than Lowes Companies. In addition to that, Identiv is 2.05 times more volatile than Lowes Companies. It trades about 0.01 of its total potential returns per unit of risk. Lowes Companies is currently generating about 0.13 per unit of volatility. If you would invest 19,663 in Lowes Companies on September 3, 2024 and sell it today you would earn a total of 6,052 from holding Lowes Companies or generate 30.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Identiv vs. Lowes Companies
Performance |
| Timeline |
| Identiv |
| Lowes Companies |
Identiv and Lowes Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Identiv and Lowes Companies
The main advantage of trading using opposite Identiv and Lowes Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Identiv position performs unexpectedly, Lowes Companies 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 Lowes Companies will offset losses from the drop in Lowes Companies' long position.| Identiv vs. Hitachi Construction Machinery | Identiv vs. Sumitomo Mitsui Construction | Identiv vs. Marie Brizard Wine | Identiv vs. HYDROFARM HLD GRP |
| Lowes Companies vs. BURLINGTON STORES | Lowes Companies vs. Chongqing Machinery Electric | Lowes Companies vs. Retail Estates NV | Lowes Companies vs. MARKET VECTR RETAIL |
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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