Correlation Between IPG Photonics and Dream Finders
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Dream Finders 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 Dream Finders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Dream Finders Homes, you can compare the effects of market volatilities on IPG Photonics and Dream Finders 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 Dream Finders. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Dream Finders.
Diversification Opportunities for IPG Photonics and Dream Finders
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between IPG and Dream is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Dream Finders Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Finders Homes 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 Dream Finders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Finders Homes has no effect on the direction of IPG Photonics i.e., IPG Photonics and Dream Finders go up and down completely randomly.
Pair Corralation between IPG Photonics and Dream Finders
Given the investment horizon of 90 days IPG Photonics is expected to under-perform the Dream Finders. But the stock apears to be less risky and, when comparing its historical volatility, IPG Photonics is 1.64 times less risky than Dream Finders. The stock trades about -0.03 of its potential returns per unit of risk. The Dream Finders Homes is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,813 in Dream Finders Homes on September 2, 2024 and sell it today you would earn a total of 514.00 from holding Dream Finders Homes or generate 18.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. Dream Finders Homes
Performance |
| Timeline |
| IPG Photonics |
| Dream Finders Homes |
IPG Photonics and Dream Finders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Dream Finders
The main advantage of trading using opposite IPG Photonics and Dream Finders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Dream Finders 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 Dream Finders will offset losses from the drop in Dream Finders' long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Entegris |
| Dream Finders vs. Hovnanian Enterprises | Dream Finders vs. Taylor Morn Home | Dream Finders vs. KB Home | Dream Finders vs. MI Homes |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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