Correlation Between Identiv and Tesla

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

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

Diversification Opportunities for Identiv and Tesla

0.85

Correlation Coefficient

Identiv  Tesla

Very poor diversification

The 3 months correlation between Identiv and Tesla is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Identiv and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla 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 Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of Identiv i.e., Identiv and Tesla go up and down completely randomly.

Pair Corralation between Identiv and Tesla

Assuming the 90 days trading horizon Identiv is expected to under-perform the Tesla. In addition to that, Identiv is 1.14 times more volatile than Tesla Inc. It trades about -0.01 of its total potential returns per unit of risk. Tesla Inc is currently generating about 0.06 per unit of volatility. If you would invest  14,660  in Tesla Inc on September 4, 2024 and sell it today you would earn a total of  17,915  from holding Tesla Inc or generate 122.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Identiv  vs.  Tesla Inc

Identiv

Risk-Adjusted Performance

11 of 100

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 uncertain basic indicators, Identiv reported solid returns over the last few months and may actually be approaching a breakup point.

Tesla Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Tesla reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Identiv and Tesla

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

The idea behind Identiv and Tesla 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.