Correlation Between IPG Photonics and KVH Industries
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and KVH Industries 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 KVH Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and KVH Industries, you can compare the effects of market volatilities on IPG Photonics and KVH Industries 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 KVH Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and KVH Industries.
Diversification Opportunities for IPG Photonics and KVH Industries
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IPG and KVH is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH Industries 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 KVH Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KVH Industries has no effect on the direction of IPG Photonics i.e., IPG Photonics and KVH Industries go up and down completely randomly.
Pair Corralation between IPG Photonics and KVH Industries
Given the investment horizon of 90 days IPG Photonics is expected to generate 40.15 times less return on investment than KVH Industries. In addition to that, IPG Photonics is 1.34 times more volatile than KVH Industries. It trades about 0.01 of its total potential returns per unit of risk. KVH Industries is currently generating about 0.32 per unit of volatility. If you would invest 476.00 in KVH Industries on August 28, 2024 and sell it today you would earn a total of 72.00 from holding KVH Industries or generate 15.13% 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. KVH Industries
Performance |
| Timeline |
| IPG Photonics |
| KVH Industries |
IPG Photonics and KVH Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and KVH Industries
The main advantage of trading using opposite IPG Photonics and KVH Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, KVH Industries 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 KVH Industries will offset losses from the drop in KVH Industries' long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| KVH Industries vs. Ichor Holdings | KVH Industries vs. Fabrinet | KVH Industries vs. Hello Group | KVH Industries vs. Ultra Clean 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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