Correlation Between IPG Photonics and Lincoln Electric
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Lincoln Electric 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 Lincoln Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Lincoln Electric Holdings, you can compare the effects of market volatilities on IPG Photonics and Lincoln Electric 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 Lincoln Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Lincoln Electric.
Diversification Opportunities for IPG Photonics and Lincoln Electric
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IPG and Lincoln is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Lincoln Electric Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln Electric 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 Lincoln Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln Electric Holdings has no effect on the direction of IPG Photonics i.e., IPG Photonics and Lincoln Electric go up and down completely randomly.
Pair Corralation between IPG Photonics and Lincoln Electric
Given the investment horizon of 90 days IPG Photonics is expected to generate 33.68 times less return on investment than Lincoln Electric. In addition to that, IPG Photonics is 1.16 times more volatile than Lincoln Electric Holdings. It trades about 0.01 of its total potential returns per unit of risk. Lincoln Electric Holdings is currently generating about 0.24 per unit of volatility. If you would invest 19,584 in Lincoln Electric Holdings on August 28, 2024 and sell it today you would earn a total of 2,410 from holding Lincoln Electric Holdings or generate 12.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. Lincoln Electric Holdings
Performance |
| Timeline |
| IPG Photonics |
| Lincoln Electric Holdings |
IPG Photonics and Lincoln Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Lincoln Electric
The main advantage of trading using opposite IPG Photonics and Lincoln Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Lincoln Electric 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 Lincoln Electric will offset losses from the drop in Lincoln Electric's long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Lincoln Electric vs. Kennametal | Lincoln Electric vs. Toro Co | Lincoln Electric vs. Snap On | Lincoln Electric vs. RBC Bearings Incorporated |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |