Correlation Between IPG Photonics and Globalfoundries
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Globalfoundries 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 Globalfoundries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Globalfoundries, you can compare the effects of market volatilities on IPG Photonics and Globalfoundries 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 Globalfoundries. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Globalfoundries.
Diversification Opportunities for IPG Photonics and Globalfoundries
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IPG and Globalfoundries is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Globalfoundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globalfoundries 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 Globalfoundries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globalfoundries has no effect on the direction of IPG Photonics i.e., IPG Photonics and Globalfoundries go up and down completely randomly.
Pair Corralation between IPG Photonics and Globalfoundries
Given the investment horizon of 90 days IPG Photonics is expected to generate 1.19 times more return on investment than Globalfoundries. However, IPG Photonics is 1.19 times more volatile than Globalfoundries. It trades about 0.03 of its potential returns per unit of risk. Globalfoundries is currently generating about -0.1 per unit of risk. If you would invest 7,276 in IPG Photonics on November 4, 2024 and sell it today you would earn a total of 57.00 from holding IPG Photonics or generate 0.78% 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. Globalfoundries
Performance |
| Timeline |
| IPG Photonics |
| Globalfoundries |
IPG Photonics and Globalfoundries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Globalfoundries
The main advantage of trading using opposite IPG Photonics and Globalfoundries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Globalfoundries 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 Globalfoundries will offset losses from the drop in Globalfoundries' long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Globalfoundries vs. NXP Semiconductors NV | Globalfoundries vs. Analog Devices | Globalfoundries vs. ON Semiconductor | Globalfoundries vs. Lattice Semiconductor |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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