Correlation Between IPG Photonics and Griffon
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Griffon 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 Griffon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Griffon, you can compare the effects of market volatilities on IPG Photonics and Griffon 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 Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Griffon.
Diversification Opportunities for IPG Photonics and Griffon
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between IPG and Griffon is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon 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 Griffon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Griffon has no effect on the direction of IPG Photonics i.e., IPG Photonics and Griffon go up and down completely randomly.
Pair Corralation between IPG Photonics and Griffon
Given the investment horizon of 90 days IPG Photonics is expected to under-perform the Griffon. But the stock apears to be less risky and, when comparing its historical volatility, IPG Photonics is 1.45 times less risky than Griffon. The stock trades about -0.03 of its potential returns per unit of risk. The Griffon is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,636 in Griffon on August 24, 2024 and sell it today you would earn a total of 1,492 from holding Griffon or generate 22.48% 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. Griffon
Performance |
| Timeline |
| IPG Photonics |
| Griffon |
IPG Photonics and Griffon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Griffon
The main advantage of trading using opposite IPG Photonics and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Griffon 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 Griffon will offset losses from the drop in Griffon's long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Griffon vs. Steel Partners Holdings | Griffon vs. Brookfield Business Partners | Griffon vs. Tejon Ranch Co | Griffon vs. Compass Diversified Holdings |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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