Correlation Between IPG Photonics and Ichor Holdings
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Ichor 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 Ichor 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 Ichor Holdings, you can compare the effects of market volatilities on IPG Photonics and Ichor 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 Ichor Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Ichor Holdings.
Diversification Opportunities for IPG Photonics and Ichor Holdings
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IPG and Ichor is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Ichor Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ichor 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 Ichor Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ichor Holdings has no effect on the direction of IPG Photonics i.e., IPG Photonics and Ichor Holdings go up and down completely randomly.
Pair Corralation between IPG Photonics and Ichor Holdings
Given the investment horizon of 90 days IPG Photonics is expected to generate 62.79 times less return on investment than Ichor Holdings. But when comparing it to its historical volatility, IPG Photonics is 1.47 times less risky than Ichor Holdings. It trades about 0.01 of its potential returns per unit of risk. Ichor Holdings is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,785 in Ichor Holdings on August 28, 2024 and sell it today you would earn a total of 652.00 from holding Ichor Holdings or generate 23.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. Ichor Holdings
Performance |
| Timeline |
| IPG Photonics |
| Ichor Holdings |
IPG Photonics and Ichor Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Ichor Holdings
The main advantage of trading using opposite IPG Photonics and Ichor Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Ichor 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 Ichor Holdings will offset losses from the drop in Ichor Holdings' long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Ichor Holdings vs. Cohu Inc | Ichor Holdings vs. Entegris | Ichor Holdings vs. Kulicke and Soffa | Ichor Holdings vs. Photronics |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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