Correlation Between IPG Photonics and Herc Holdings
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Herc Holdings 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 Herc Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Herc Holdings, you can compare the effects of market volatilities on IPG Photonics and Herc Holdings 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 Herc Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Herc Holdings.
Diversification Opportunities for IPG Photonics and Herc Holdings
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IPG and Herc is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Herc Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herc Holdings 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 Herc Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herc Holdings has no effect on the direction of IPG Photonics i.e., IPG Photonics and Herc Holdings go up and down completely randomly.
Pair Corralation between IPG Photonics and Herc Holdings
Given the investment horizon of 90 days IPG Photonics is expected to generate 1.32 times more return on investment than Herc Holdings. However, IPG Photonics is 1.32 times more volatile than Herc Holdings. It trades about -0.08 of its potential returns per unit of risk. Herc Holdings is currently generating about -0.18 per unit of risk. If you would invest 8,193 in IPG Photonics on September 12, 2024 and sell it today you would lose (413.00) from holding IPG Photonics or give up 5.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. Herc Holdings
Performance |
| Timeline |
| IPG Photonics |
| Herc Holdings |
IPG Photonics and Herc Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Herc Holdings
The main advantage of trading using opposite IPG Photonics and Herc Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Herc Holdings 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 Herc Holdings will offset losses from the drop in Herc Holdings' long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Herc Holdings vs. McGrath RentCorp | Herc Holdings vs. Alta Equipment Group | Herc Holdings vs. Custom Truck One | Herc Holdings vs. GATX Corporation |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |