Correlation Between IPG Photonics and Everspin Technologies
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Everspin Technologies 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 Everspin Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Everspin Technologies, you can compare the effects of market volatilities on IPG Photonics and Everspin Technologies 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 Everspin Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Everspin Technologies.
Diversification Opportunities for IPG Photonics and Everspin Technologies
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IPG and Everspin is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Everspin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everspin Technologies 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 Everspin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everspin Technologies has no effect on the direction of IPG Photonics i.e., IPG Photonics and Everspin Technologies go up and down completely randomly.
Pair Corralation between IPG Photonics and Everspin Technologies
Given the investment horizon of 90 days IPG Photonics is expected to generate 0.79 times more return on investment than Everspin Technologies. However, IPG Photonics is 1.27 times less risky than Everspin Technologies. It trades about -0.04 of its potential returns per unit of risk. Everspin Technologies is currently generating about -0.03 per unit of risk. If you would invest 11,156 in IPG Photonics on August 26, 2024 and sell it today you would lose (3,377) from holding IPG Photonics or give up 30.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. Everspin Technologies
Performance |
| Timeline |
| IPG Photonics |
| Everspin Technologies |
IPG Photonics and Everspin Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Everspin Technologies
The main advantage of trading using opposite IPG Photonics and Everspin Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Everspin Technologies 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 Everspin Technologies will offset losses from the drop in Everspin Technologies' long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Everspin Technologies vs. Teradyne | Everspin Technologies vs. IPG Photonics | Everspin Technologies vs. Applied Materials |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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