Correlation Between Celestica and IPG Photonics
Can any of the company-specific risk be diversified away by investing in both Celestica and IPG Photonics 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 Celestica and IPG Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Celestica and IPG Photonics, you can compare the effects of market volatilities on Celestica and IPG Photonics 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 Celestica with a short position of IPG Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celestica and IPG Photonics.
Diversification Opportunities for Celestica and IPG Photonics
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Celestica and IPG is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Celestica and IPG Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPG Photonics and Celestica 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 Celestica are associated (or correlated) with IPG Photonics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IPG Photonics has no effect on the direction of Celestica i.e., Celestica and IPG Photonics go up and down completely randomly.
Pair Corralation between Celestica and IPG Photonics
Considering the 90-day investment horizon Celestica is expected to generate 1.24 times more return on investment than IPG Photonics. However, Celestica is 1.24 times more volatile than IPG Photonics. It trades about 0.14 of its potential returns per unit of risk. IPG Photonics is currently generating about 0.01 per unit of risk. If you would invest 8,406 in Celestica on September 13, 2024 and sell it today you would earn a total of 695.00 from holding Celestica or generate 8.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Celestica vs. IPG Photonics
Performance |
| Timeline |
| Celestica |
| IPG Photonics |
Celestica and IPG Photonics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Celestica and IPG Photonics
The main advantage of trading using opposite Celestica and IPG Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celestica position performs unexpectedly, IPG Photonics 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 IPG Photonics will offset losses from the drop in IPG Photonics' long position.| Celestica vs. Plexus Corp | Celestica vs. Benchmark Electronics | Celestica vs. Flex | Celestica vs. Jabil Circuit |
| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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