Correlation Between IPG Photonics and Babcock Wilcox
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Babcock Wilcox 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 Babcock Wilcox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Babcock Wilcox Enterprises, you can compare the effects of market volatilities on IPG Photonics and Babcock Wilcox 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 Babcock Wilcox. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Babcock Wilcox.
Diversification Opportunities for IPG Photonics and Babcock Wilcox
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IPG and Babcock is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Babcock Wilcox Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Babcock Wilcox Enter 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 Babcock Wilcox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Babcock Wilcox Enter has no effect on the direction of IPG Photonics i.e., IPG Photonics and Babcock Wilcox go up and down completely randomly.
Pair Corralation between IPG Photonics and Babcock Wilcox
Given the investment horizon of 90 days IPG Photonics is expected to under-perform the Babcock Wilcox. In addition to that, IPG Photonics is 1.07 times more volatile than Babcock Wilcox Enterprises. It trades about -0.08 of its total potential returns per unit of risk. Babcock Wilcox Enterprises is currently generating about -0.08 per unit of volatility. If you would invest 2,100 in Babcock Wilcox Enterprises on November 5, 2024 and sell it today you would lose (64.00) from holding Babcock Wilcox Enterprises or give up 3.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. Babcock Wilcox Enterprises
Performance |
| Timeline |
| IPG Photonics |
| Babcock Wilcox Enter |
IPG Photonics and Babcock Wilcox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Babcock Wilcox
The main advantage of trading using opposite IPG Photonics and Babcock Wilcox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Babcock Wilcox 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 Babcock Wilcox will offset losses from the drop in Babcock Wilcox's long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Babcock Wilcox vs. Scholastic | Babcock Wilcox vs. Chester Mining | Babcock Wilcox vs. Perseus Mining Limited | Babcock Wilcox vs. Universal Technical Institute |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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