Correlation Between IPG Photonics and MKS Instruments
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and MKS Instruments 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 MKS Instruments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and MKS Instruments, you can compare the effects of market volatilities on IPG Photonics and MKS Instruments 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 MKS Instruments. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and MKS Instruments.
Diversification Opportunities for IPG Photonics and MKS Instruments
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IPG and MKS is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and MKS Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MKS Instruments 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 MKS Instruments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MKS Instruments has no effect on the direction of IPG Photonics i.e., IPG Photonics and MKS Instruments go up and down completely randomly.
Pair Corralation between IPG Photonics and MKS Instruments
Given the investment horizon of 90 days IPG Photonics is expected to generate 38.79 times less return on investment than MKS Instruments. But when comparing it to its historical volatility, IPG Photonics is 1.24 times less risky than MKS Instruments. It trades about 0.01 of its potential returns per unit of risk. MKS Instruments is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 10,246 in MKS Instruments on August 28, 2024 and sell it today you would earn a total of 1,403 from holding MKS Instruments or generate 13.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. MKS Instruments
Performance |
| Timeline |
| IPG Photonics |
| MKS Instruments |
IPG Photonics and MKS Instruments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and MKS Instruments
The main advantage of trading using opposite IPG Photonics and MKS Instruments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, MKS Instruments 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 MKS Instruments will offset losses from the drop in MKS Instruments' long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| MKS Instruments vs. Vontier Corp | MKS Instruments vs. Teledyne Technologies Incorporated | MKS Instruments vs. ESCO Technologies | MKS Instruments vs. Sensata Technologies Holding |
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.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |