Correlation Between IPG Photonics and Estee Lauder
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Estee Lauder 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 Estee Lauder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Estee Lauder Companies, you can compare the effects of market volatilities on IPG Photonics and Estee Lauder 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 Estee Lauder. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Estee Lauder.
Diversification Opportunities for IPG Photonics and Estee Lauder
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IPG and Estee is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Estee Lauder Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Estee Lauder Companies 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 Estee Lauder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Estee Lauder Companies has no effect on the direction of IPG Photonics i.e., IPG Photonics and Estee Lauder go up and down completely randomly.
Pair Corralation between IPG Photonics and Estee Lauder
Given the investment horizon of 90 days IPG Photonics is expected to generate 0.62 times more return on investment than Estee Lauder. However, IPG Photonics is 1.6 times less risky than Estee Lauder. It trades about 0.13 of its potential returns per unit of risk. Estee Lauder Companies is currently generating about -0.09 per unit of risk. If you would invest 6,543 in IPG Photonics on September 2, 2024 and sell it today you would earn a total of 1,261 from holding IPG Photonics or generate 19.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. Estee Lauder Companies
Performance |
| Timeline |
| IPG Photonics |
| Estee Lauder Companies |
IPG Photonics and Estee Lauder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Estee Lauder
The main advantage of trading using opposite IPG Photonics and Estee Lauder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Estee Lauder 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 Estee Lauder will offset losses from the drop in Estee Lauder's long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Entegris |
| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Procter Gamble | Estee Lauder vs. Coty 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 CEOs Directory module to screen CEOs from public companies around the world.
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