Correlation Between NetApp and Identiv

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Can any of the company-specific risk be diversified away by investing in both NetApp 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 NetApp and Identiv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NetApp Inc and Identiv, you can compare the effects of market volatilities on NetApp 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 NetApp with a short position of Identiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of NetApp and Identiv.

Diversification Opportunities for NetApp and Identiv

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between NetApp and Identiv is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding NetApp Inc and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv and NetApp 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 NetApp Inc 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 NetApp i.e., NetApp and Identiv go up and down completely randomly.

Pair Corralation between NetApp and Identiv

Assuming the 90 days horizon NetApp is expected to generate 2.37 times less return on investment than Identiv. But when comparing it to its historical volatility, NetApp Inc is 1.16 times less risky than Identiv. It trades about 0.1 of its potential returns per unit of risk. Identiv is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  341.00  in Identiv on September 13, 2024 and sell it today you would earn a total of  48.00  from holding Identiv or generate 14.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

NetApp Inc  vs.  Identiv

 Performance 
       Timeline  
NetApp Inc 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in NetApp Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NetApp reported solid returns over the last few months and may actually be approaching a breakup point.
Identiv 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Identiv are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Identiv reported solid returns over the last few months and may actually be approaching a breakup point.

NetApp and Identiv Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NetApp and Identiv

The main advantage of trading using opposite NetApp and Identiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NetApp 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.
The idea behind NetApp Inc and Identiv 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.
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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