Correlation Between Identiv and HP
Can any of the company-specific risk be diversified away by investing in both Identiv and HP 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 HP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Identiv and HP Inc, you can compare the effects of market volatilities on Identiv and HP 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 HP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Identiv and HP.
Diversification Opportunities for Identiv and HP
Modest diversification
The 3 months correlation between Identiv and HP is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Identiv and HP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HP 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 HP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HP Inc has no effect on the direction of Identiv i.e., Identiv and HP go up and down completely randomly.
Pair Corralation between Identiv and HP
Given the investment horizon of 90 days Identiv is expected to under-perform the HP. In addition to that, Identiv is 2.03 times more volatile than HP Inc. It trades about -0.03 of its total potential returns per unit of risk. HP Inc is currently generating about -0.01 per unit of volatility. If you would invest 3,538 in HP Inc on January 25, 2024 and sell it today you would lose (732.00) from holding HP Inc or give up 20.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Identiv vs. HP Inc
Performance |
| Timeline |
| Identiv |
| HP Inc |
Identiv and HP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Identiv and HP
The main advantage of trading using opposite Identiv and HP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Identiv position performs unexpectedly, HP 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 HP will offset losses from the drop in HP's long position.The idea behind Identiv and HP 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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