Correlation Between First Horizon and IPG Photonics
Can any of the company-specific risk be diversified away by investing in both First Horizon 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 First Horizon and IPG Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Horizon and IPG Photonics, you can compare the effects of market volatilities on First Horizon 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 First Horizon with a short position of IPG Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Horizon and IPG Photonics.
Diversification Opportunities for First Horizon and IPG Photonics
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and IPG is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding First Horizon and IPG Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPG Photonics and First Horizon 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 First Horizon 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 First Horizon i.e., First Horizon and IPG Photonics go up and down completely randomly.
Pair Corralation between First Horizon and IPG Photonics
Assuming the 90 days trading horizon First Horizon is expected to generate 0.08 times more return on investment than IPG Photonics. However, First Horizon is 12.79 times less risky than IPG Photonics. It trades about 0.01 of its potential returns per unit of risk. IPG Photonics is currently generating about -0.35 per unit of risk. If you would invest 2,505 in First Horizon on November 28, 2024 and sell it today you would earn a total of 1.00 from holding First Horizon or generate 0.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Horizon vs. IPG Photonics
Performance |
| Timeline |
| First Horizon |
| IPG Photonics |
First Horizon and IPG Photonics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Horizon and IPG Photonics
The main advantage of trading using opposite First Horizon and IPG Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Horizon 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.| First Horizon vs. Xponential Fitness | First Horizon vs. Repligen | First Horizon vs. Paranovus Entertainment Technology | First Horizon vs. Canlan Ice Sports |
| 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 Stocks Directory module to find actively traded stocks across global markets.
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