Correlation Between IPG Photonics and Macmahon Holdings
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Macmahon 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 Macmahon 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 Macmahon Holdings Limited, you can compare the effects of market volatilities on IPG Photonics and Macmahon 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 Macmahon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Macmahon Holdings.
Diversification Opportunities for IPG Photonics and Macmahon Holdings
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IPG and Macmahon is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Macmahon Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macmahon 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 Macmahon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macmahon Holdings has no effect on the direction of IPG Photonics i.e., IPG Photonics and Macmahon Holdings go up and down completely randomly.
Pair Corralation between IPG Photonics and Macmahon Holdings
If you would invest 25.00 in Macmahon Holdings Limited on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Macmahon Holdings Limited or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
IPG Photonics vs. Macmahon Holdings Limited
Performance |
| Timeline |
| IPG Photonics |
| Macmahon Holdings |
IPG Photonics and Macmahon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Macmahon Holdings
The main advantage of trading using opposite IPG Photonics and Macmahon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Macmahon 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 Macmahon Holdings will offset losses from the drop in Macmahon Holdings' long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Macmahon Holdings vs. Advantage Solutions | Macmahon Holdings vs. Atlas Corp | Macmahon Holdings vs. PureCycle Technologies | Macmahon Holdings vs. WM Technology |
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.
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