Correlation Between IPG Photonics and BCB Bancorp
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and BCB Bancorp 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 BCB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and BCB Bancorp, you can compare the effects of market volatilities on IPG Photonics and BCB Bancorp 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 BCB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and BCB Bancorp.
Diversification Opportunities for IPG Photonics and BCB Bancorp
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IPG and BCB is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and BCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCB Bancorp 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 BCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCB Bancorp has no effect on the direction of IPG Photonics i.e., IPG Photonics and BCB Bancorp go up and down completely randomly.
Pair Corralation between IPG Photonics and BCB Bancorp
Given the investment horizon of 90 days IPG Photonics is expected to under-perform the BCB Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, IPG Photonics is 1.14 times less risky than BCB Bancorp. The stock trades about -0.02 of its potential returns per unit of risk. The BCB Bancorp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,005 in BCB Bancorp on August 27, 2024 and sell it today you would earn a total of 345.00 from holding BCB Bancorp or generate 34.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. BCB Bancorp
Performance |
| Timeline |
| IPG Photonics |
| BCB Bancorp |
IPG Photonics and BCB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and BCB Bancorp
The main advantage of trading using opposite IPG Photonics and BCB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, BCB Bancorp 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 BCB Bancorp will offset losses from the drop in BCB Bancorp's long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| BCB Bancorp vs. Provident Financial Services | BCB Bancorp vs. First Mid Illinois | BCB Bancorp vs. ConnectOne Bancorp | BCB Bancorp vs. Finward Bancorp |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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