Correlation Between IPG Photonics and Analog Devices
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Analog Devices 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 IPG Photonics and Analog Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Analog Devices, you can compare the effects of market volatilities on IPG Photonics and Analog Devices 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 IPG Photonics with a short position of Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Analog Devices.
Diversification Opportunities for IPG Photonics and Analog Devices
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IPG and Analog is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices and IPG Photonics 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 IPG Photonics are associated (or correlated) with Analog Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Devices has no effect on the direction of IPG Photonics i.e., IPG Photonics and Analog Devices go up and down completely randomly.
Pair Corralation between IPG Photonics and Analog Devices
Given the investment horizon of 90 days IPG Photonics is expected to generate 1.53 times more return on investment than Analog Devices. However, IPG Photonics is 1.53 times more volatile than Analog Devices. It trades about 0.07 of its potential returns per unit of risk. Analog Devices is currently generating about -0.12 per unit of risk. If you would invest 7,476 in IPG Photonics on August 24, 2024 and sell it today you would earn a total of 303.00 from holding IPG Photonics or generate 4.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. Analog Devices
Performance |
| Timeline |
| IPG Photonics |
| Analog Devices |
IPG Photonics and Analog Devices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Analog Devices
The main advantage of trading using opposite IPG Photonics and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Analog Devices 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 Analog Devices will offset losses from the drop in Analog Devices' long position.| IPG Photonics vs. Cohu Inc | IPG Photonics vs. Entegris | IPG Photonics vs. Veeco Instruments | IPG Photonics vs. Ultra Clean Holdings |
| Analog Devices vs. Eshallgo Class A | Analog Devices vs. Amtech Systems | Analog Devices vs. Gold Fields Ltd | Analog Devices vs. Aegean Airlines SA |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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