Correlation Between Identiv and Velo3D

Can any of the company-specific risk be diversified away by investing in both Identiv and Velo3D 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 Velo3D into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Identiv and Velo3D Inc, you can compare the effects of market volatilities on Identiv and Velo3D 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 Velo3D. Check out your portfolio center. Please also check ongoing floating volatility patterns of Identiv and Velo3D.

Diversification Opportunities for Identiv and Velo3D

-0.75

Correlation Coefficient

Identiv  Velo3D

Pay attention - limited upside

The 3 months correlation between Identiv and Velo3D is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Identiv and Velo3D Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Velo3D 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 Velo3D. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Velo3D Inc has no effect on the direction of Identiv i.e., Identiv and Velo3D go up and down completely randomly.

Pair Corralation between Identiv and Velo3D

Given the investment horizon of 90 days Identiv is expected to generate 6.95 times less return on investment than Velo3D. But when comparing it to its historical volatility, Identiv is 10.78 times less risky than Velo3D. It trades about 0.12 of its potential returns per unit of risk. Velo3D Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  129.00  in Velo3D Inc on August 31, 2024 and sell it today you would lose (32.00) from holding Velo3D Inc or give up 24.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	22.22%
Values	Daily Returns

Identiv  vs.  Velo3D Inc

Identiv

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Identiv are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Identiv exhibited solid returns over the last few months and may actually be approaching a breakup point.

Velo3D Inc

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Velo3D Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather uncertain essential indicators, Velo3D exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Identiv and Velo3D

The main advantage of trading using opposite Identiv and Velo3D positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Identiv position performs unexpectedly, Velo3D 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 Velo3D will offset losses from the drop in Velo3D's long position.

The idea behind Identiv and Velo3D 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..