Correlation Between IPG Photonics and Boston Properties
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Boston Properties 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 Boston Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Boston Properties, you can compare the effects of market volatilities on IPG Photonics and Boston Properties 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 Boston Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Boston Properties.
Diversification Opportunities for IPG Photonics and Boston Properties
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IPG and Boston is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties 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 Boston Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Properties has no effect on the direction of IPG Photonics i.e., IPG Photonics and Boston Properties go up and down completely randomly.
Pair Corralation between IPG Photonics and Boston Properties
Given the investment horizon of 90 days IPG Photonics is expected to under-perform the Boston Properties. But the stock apears to be less risky and, when comparing its historical volatility, IPG Photonics is 1.03 times less risky than Boston Properties. The stock trades about -0.01 of its potential returns per unit of risk. The Boston Properties is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 5,967 in Boston Properties on September 2, 2024 and sell it today you would earn a total of 2,232 from holding Boston Properties or generate 37.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. Boston Properties
Performance |
| Timeline |
| IPG Photonics |
| Boston Properties |
IPG Photonics and Boston Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Boston Properties
The main advantage of trading using opposite IPG Photonics and Boston Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Boston Properties 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 Boston Properties will offset losses from the drop in Boston Properties' long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Entegris |
| Boston Properties vs. Douglas Emmett | Boston Properties vs. Vornado Realty Trust | Boston Properties vs. Highwoods Properties | Boston Properties vs. Piedmont Office Realty |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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