Correlation Between IPG Photonics and BCE
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and BCE 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 BCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and BCE Inc, you can compare the effects of market volatilities on IPG Photonics and BCE 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 BCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and BCE.
Diversification Opportunities for IPG Photonics and BCE
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IPG and BCE is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc 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 BCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCE Inc has no effect on the direction of IPG Photonics i.e., IPG Photonics and BCE go up and down completely randomly.
Pair Corralation between IPG Photonics and BCE
Given the investment horizon of 90 days IPG Photonics is expected to under-perform the BCE. In addition to that, IPG Photonics is 4.58 times more volatile than BCE Inc. It trades about -0.03 of its total potential returns per unit of risk. BCE Inc is currently generating about 0.21 per unit of volatility. If you would invest 1,069 in BCE Inc on August 29, 2024 and sell it today you would earn a total of 31.00 from holding BCE Inc or generate 2.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. BCE Inc
Performance |
| Timeline |
| IPG Photonics |
| BCE Inc |
IPG Photonics and BCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and BCE
The main advantage of trading using opposite IPG Photonics and BCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, BCE 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 BCE will offset losses from the drop in BCE's long position.| 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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