Correlation Between IPG Photonics and Enphase Energy
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Enphase Energy 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 Enphase Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Enphase Energy, you can compare the effects of market volatilities on IPG Photonics and Enphase Energy 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 Enphase Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Enphase Energy.
Diversification Opportunities for IPG Photonics and Enphase Energy
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IPG and Enphase is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Enphase Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enphase Energy 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 Enphase Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enphase Energy has no effect on the direction of IPG Photonics i.e., IPG Photonics and Enphase Energy go up and down completely randomly.
Pair Corralation between IPG Photonics and Enphase Energy
Given the investment horizon of 90 days IPG Photonics is expected to generate 0.42 times more return on investment than Enphase Energy. However, IPG Photonics is 2.37 times less risky than Enphase Energy. It trades about -0.18 of its potential returns per unit of risk. Enphase Energy is currently generating about -0.09 per unit of risk. If you would invest 8,505 in IPG Photonics on August 30, 2024 and sell it today you would lose (775.00) from holding IPG Photonics or give up 9.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. Enphase Energy
Performance |
| Timeline |
| IPG Photonics |
| Enphase Energy |
IPG Photonics and Enphase Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Enphase Energy
The main advantage of trading using opposite IPG Photonics and Enphase Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Enphase Energy 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 Enphase Energy will offset losses from the drop in Enphase Energy's long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Enphase Energy vs. First Solar | Enphase Energy vs. Sunrun Inc | Enphase Energy vs. Canadian Solar | Enphase Energy vs. SolarEdge Technologies |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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