Correlation Between Identiv and Volkswagen

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

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

Diversification Opportunities for Identiv and Volkswagen

-0.83

Correlation Coefficient

Identiv  Volkswagen

Pay attention - limited upside

The 3 months correlation between Identiv and Volkswagen is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Identiv and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of Identiv i.e., Identiv and Volkswagen go up and down completely randomly.

Pair Corralation between Identiv and Volkswagen

Assuming the 90 days trading horizon Identiv is expected to generate 1.65 times more return on investment than Volkswagen. However, Identiv is 1.65 times more volatile than Volkswagen AG. It trades about 0.15 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.16 per unit of risk. If you would invest  285.00  in Identiv on September 4, 2024 and sell it today you would earn a total of  75.00  from holding Identiv or generate 26.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Identiv  vs.  Volkswagen AG

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.

Volkswagen AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Volkswagen AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Identiv and Volkswagen

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

The idea behind Identiv and Volkswagen AG 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.

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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 Anywhere module to track or share privately all of your investments from the convenience of any device.