Correlation Between Dream Finders and IPG Photonics
Can any of the company-specific risk be diversified away by investing in both Dream Finders 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 Dream Finders and IPG Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dream Finders Homes and IPG Photonics, you can compare the effects of market volatilities on Dream Finders 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 Dream Finders with a short position of IPG Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Finders and IPG Photonics.
Diversification Opportunities for Dream Finders and IPG Photonics
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dream and IPG is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Dream Finders Homes and IPG Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPG Photonics and Dream Finders 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 Dream Finders Homes 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 Dream Finders i.e., Dream Finders and IPG Photonics go up and down completely randomly.
Pair Corralation between Dream Finders and IPG Photonics
Considering the 90-day investment horizon Dream Finders Homes is expected to generate 1.64 times more return on investment than IPG Photonics. However, Dream Finders is 1.64 times more volatile than IPG Photonics. It trades about 0.04 of its potential returns per unit of risk. IPG Photonics is currently generating about -0.03 per unit of risk. If you would invest 2,813 in Dream Finders Homes on September 2, 2024 and sell it today you would earn a total of 514.00 from holding Dream Finders Homes or generate 18.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dream Finders Homes vs. IPG Photonics
Performance |
| Timeline |
| Dream Finders Homes |
| IPG Photonics |
Dream Finders and IPG Photonics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dream Finders and IPG Photonics
The main advantage of trading using opposite Dream Finders and IPG Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Finders 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.| Dream Finders vs. Hovnanian Enterprises | Dream Finders vs. Taylor Morn Home | Dream Finders vs. KB Home | Dream Finders vs. MI Homes |
| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Entegris |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |