Correlation Between Identiv and Seagate Technology

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

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

Diversification Opportunities for Identiv and Seagate Technology

-0.45

Correlation Coefficient

Identiv  Seagate Technology

Very good diversification

The 3 months correlation between Identiv and Seagate is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Identiv and Seagate Technology PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seagate Technology PLC 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 Seagate Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seagate Technology PLC has no effect on the direction of Identiv i.e., Identiv and Seagate Technology go up and down completely randomly.

Pair Corralation between Identiv and Seagate Technology

Given the investment horizon of 90 days Identiv is expected to generate 1.84 times more return on investment than Seagate Technology. However, Identiv is 1.84 times more volatile than Seagate Technology PLC. It trades about -0.08 of its potential returns per unit of risk. Seagate Technology PLC is currently generating about -0.33 per unit of risk. If you would invest  387.00  in Identiv on September 28, 2024 and sell it today you would lose (23.00) from holding Identiv or give up 5.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Identiv  vs.  Seagate Technology PLC

Identiv

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Identiv are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Identiv is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Seagate Technology PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seagate Technology PLC 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 fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Identiv and Seagate Technology

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

The idea behind Identiv and Seagate Technology PLC 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.