Correlation Between IPG Photonics and Church Dwight
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Church Dwight 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 Church Dwight into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Church Dwight, you can compare the effects of market volatilities on IPG Photonics and Church Dwight 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 Church Dwight. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Church Dwight.
Diversification Opportunities for IPG Photonics and Church Dwight
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IPG and Church is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Church Dwight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Church Dwight 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 Church Dwight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Church Dwight has no effect on the direction of IPG Photonics i.e., IPG Photonics and Church Dwight go up and down completely randomly.
Pair Corralation between IPG Photonics and Church Dwight
Given the investment horizon of 90 days IPG Photonics is expected to under-perform the Church Dwight. In addition to that, IPG Photonics is 2.02 times more volatile than Church Dwight. It trades about -0.03 of its total potential returns per unit of risk. Church Dwight is currently generating about 0.03 per unit of volatility. If you would invest 10,671 in Church Dwight on September 1, 2024 and sell it today you would earn a total of 342.00 from holding Church Dwight or generate 3.2% 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. Church Dwight
Performance |
| Timeline |
| IPG Photonics |
| Church Dwight |
IPG Photonics and Church Dwight Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Church Dwight
The main advantage of trading using opposite IPG Photonics and Church Dwight positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Church Dwight 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 Church Dwight will offset losses from the drop in Church Dwight's long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Church Dwight vs. Colgate Palmolive | Church Dwight vs. Unilever PLC ADR | Church Dwight vs. Kimberly Clark | Church Dwight vs. Estee Lauder Companies |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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