Correlation Between Identiv and Avnet
Can any of the company-specific risk be diversified away by investing in both Identiv and Avnet 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 Avnet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Identiv and Avnet Inc, you can compare the effects of market volatilities on Identiv and Avnet 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 Avnet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Identiv and Avnet.
Diversification Opportunities for Identiv and Avnet
Poor diversification
The 3 months correlation between Identiv and Avnet is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Identiv and Avnet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avnet Inc 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 Avnet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avnet Inc has no effect on the direction of Identiv i.e., Identiv and Avnet go up and down completely randomly.
Pair Corralation between Identiv and Avnet
Assuming the 90 days trading horizon Identiv is expected to generate 2.96 times more return on investment than Avnet. However, Identiv is 2.96 times more volatile than Avnet Inc. It trades about 0.13 of its potential returns per unit of risk. Avnet Inc is currently generating about -0.05 per unit of risk. If you would invest 332.00 in Identiv on December 1, 2024 and sell it today you would earn a total of 33.00 from holding Identiv or generate 9.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Identiv vs. Avnet Inc
Performance |
| Timeline |
| Identiv |
| Avnet Inc |
Identiv and Avnet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Identiv and Avnet
The main advantage of trading using opposite Identiv and Avnet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Identiv position performs unexpectedly, Avnet 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 Avnet will offset losses from the drop in Avnet's long position.The idea behind Identiv and Avnet Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Avnet vs. ADRIATIC METALS LS 013355 | Avnet vs. LI METAL P | Avnet vs. GALENA MINING LTD | Avnet vs. Yuexiu Transport Infrastructure |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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