Correlation Between IPG Photonics and Luxfer Holdings
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Luxfer 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 Luxfer 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 Luxfer Holdings PLC, you can compare the effects of market volatilities on IPG Photonics and Luxfer 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 Luxfer Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Luxfer Holdings.
Diversification Opportunities for IPG Photonics and Luxfer Holdings
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IPG and Luxfer is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Luxfer Holdings PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luxfer Holdings PLC 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 Luxfer Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luxfer Holdings PLC has no effect on the direction of IPG Photonics i.e., IPG Photonics and Luxfer Holdings go up and down completely randomly.
Pair Corralation between IPG Photonics and Luxfer Holdings
Given the investment horizon of 90 days IPG Photonics is expected to under-perform the Luxfer Holdings. In addition to that, IPG Photonics is 1.17 times more volatile than Luxfer Holdings PLC. It trades about -0.07 of its total potential returns per unit of risk. Luxfer Holdings PLC is currently generating about 0.01 per unit of volatility. If you would invest 1,436 in Luxfer Holdings PLC on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Luxfer Holdings PLC or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. Luxfer Holdings PLC
Performance |
| Timeline |
| IPG Photonics |
| Luxfer Holdings PLC |
IPG Photonics and Luxfer Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Luxfer Holdings
The main advantage of trading using opposite IPG Photonics and Luxfer Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Luxfer 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 Luxfer Holdings will offset losses from the drop in Luxfer Holdings' long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Luxfer Holdings vs. Graham | Luxfer Holdings vs. Enerpac Tool Group | Luxfer Holdings vs. Kadant Inc | Luxfer Holdings vs. Omega Flex |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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