Correlation Between Estee Lauder and IPG Photonics
Can any of the company-specific risk be diversified away by investing in both Estee Lauder 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 Estee Lauder and IPG Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Estee Lauder Companies and IPG Photonics, you can compare the effects of market volatilities on Estee Lauder 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 Estee Lauder with a short position of IPG Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and IPG Photonics.
Diversification Opportunities for Estee Lauder and IPG Photonics
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Estee and IPG is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and IPG Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPG Photonics and Estee Lauder 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 Estee Lauder Companies 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 Estee Lauder i.e., Estee Lauder and IPG Photonics go up and down completely randomly.
Pair Corralation between Estee Lauder and IPG Photonics
Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to under-perform the IPG Photonics. In addition to that, Estee Lauder is 1.6 times more volatile than IPG Photonics. It trades about -0.09 of its total potential returns per unit of risk. IPG Photonics is currently generating about 0.13 per unit of volatility. If you would invest 6,543 in IPG Photonics on September 2, 2024 and sell it today you would earn a total of 1,261 from holding IPG Photonics or generate 19.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Estee Lauder Companies vs. IPG Photonics
Performance |
| Timeline |
| Estee Lauder Companies |
| IPG Photonics |
Estee Lauder and IPG Photonics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Estee Lauder and IPG Photonics
The main advantage of trading using opposite Estee Lauder and IPG Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder 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.| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Procter Gamble | Estee Lauder vs. Coty Inc |
| 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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