Correlation Between NIPPON STEEL and Identiv
Can any of the company-specific risk be diversified away by investing in both NIPPON STEEL and Identiv 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 NIPPON STEEL and Identiv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NIPPON STEEL SPADR and Identiv, you can compare the effects of market volatilities on NIPPON STEEL and Identiv 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 NIPPON STEEL with a short position of Identiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIPPON STEEL and Identiv.
Diversification Opportunities for NIPPON STEEL and Identiv
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NIPPON and Identiv is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding NIPPON STEEL SPADR and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv and NIPPON STEEL 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 NIPPON STEEL SPADR are associated (or correlated) with Identiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Identiv has no effect on the direction of NIPPON STEEL i.e., NIPPON STEEL and Identiv go up and down completely randomly.
Pair Corralation between NIPPON STEEL and Identiv
Assuming the 90 days trading horizon NIPPON STEEL is expected to generate 4.71 times less return on investment than Identiv. But when comparing it to its historical volatility, NIPPON STEEL SPADR is 2.33 times less risky than Identiv. It trades about 0.12 of its potential returns per unit of risk. Identiv is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 322.00 in Identiv on August 29, 2024 and sell it today you would earn a total of 52.00 from holding Identiv or generate 16.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
NIPPON STEEL SPADR vs. Identiv
Performance |
| Timeline |
| NIPPON STEEL SPADR |
| Identiv |
NIPPON STEEL and Identiv Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NIPPON STEEL and Identiv
The main advantage of trading using opposite NIPPON STEEL and Identiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIPPON STEEL position performs unexpectedly, Identiv 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 Identiv will offset losses from the drop in Identiv's long position.| NIPPON STEEL vs. Steel Dynamics | NIPPON STEEL vs. POSCO Holdings | NIPPON STEEL vs. Superior Plus Corp | NIPPON STEEL vs. SIVERS SEMICONDUCTORS AB |
| Identiv vs. NIPPON STEEL SPADR | Identiv vs. GFL ENVIRONM | Identiv vs. RELIANCE STEEL AL | Identiv vs. United States Steel |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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