Correlation Between Ichor Holdings and IPG Photonics
Can any of the company-specific risk be diversified away by investing in both Ichor Holdings 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 Ichor Holdings and IPG Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ichor Holdings and IPG Photonics, you can compare the effects of market volatilities on Ichor Holdings 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 Ichor Holdings with a short position of IPG Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ichor Holdings and IPG Photonics.
Diversification Opportunities for Ichor Holdings and IPG Photonics
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ichor and IPG is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ichor Holdings and IPG Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPG Photonics and Ichor Holdings 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 Ichor Holdings 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 Ichor Holdings i.e., Ichor Holdings and IPG Photonics go up and down completely randomly.
Pair Corralation between Ichor Holdings and IPG Photonics
Given the investment horizon of 90 days Ichor Holdings is expected to generate 1.46 times more return on investment than IPG Photonics. However, Ichor Holdings is 1.46 times more volatile than IPG Photonics. It trades about 0.23 of its potential returns per unit of risk. IPG Photonics is currently generating about -0.01 per unit of risk. If you would invest 2,684 in Ichor Holdings on August 24, 2024 and sell it today you would earn a total of 572.00 from holding Ichor Holdings or generate 21.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ichor Holdings vs. IPG Photonics
Performance |
| Timeline |
| Ichor Holdings |
| IPG Photonics |
Ichor Holdings and IPG Photonics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ichor Holdings and IPG Photonics
The main advantage of trading using opposite Ichor Holdings and IPG Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ichor Holdings 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.| Ichor Holdings vs. Cohu Inc | Ichor Holdings vs. Entegris | Ichor Holdings vs. Veeco Instruments | Ichor Holdings vs. Ultra Clean Holdings |
| IPG Photonics vs. Cohu Inc | IPG Photonics vs. Entegris | IPG Photonics vs. Veeco Instruments | IPG Photonics vs. Ultra Clean Holdings |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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