Correlation Between IPG Photonics and Emerson Radio
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Emerson Radio 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 Emerson Radio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Emerson Radio, you can compare the effects of market volatilities on IPG Photonics and Emerson Radio 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 Emerson Radio. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Emerson Radio.
Diversification Opportunities for IPG Photonics and Emerson Radio
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IPG and Emerson is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Emerson Radio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Radio 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 Emerson Radio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Radio has no effect on the direction of IPG Photonics i.e., IPG Photonics and Emerson Radio go up and down completely randomly.
Pair Corralation between IPG Photonics and Emerson Radio
Given the investment horizon of 90 days IPG Photonics is expected to generate 0.74 times more return on investment than Emerson Radio. However, IPG Photonics is 1.36 times less risky than Emerson Radio. It trades about -0.17 of its potential returns per unit of risk. Emerson Radio is currently generating about -0.2 per unit of risk. If you would invest 8,505 in IPG Photonics on August 30, 2024 and sell it today you would lose (775.00) from holding IPG Photonics or give up 9.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. Emerson Radio
Performance |
| Timeline |
| IPG Photonics |
| Emerson Radio |
IPG Photonics and Emerson Radio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Emerson Radio
The main advantage of trading using opposite IPG Photonics and Emerson Radio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Emerson Radio 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 Emerson Radio will offset losses from the drop in Emerson Radio's long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Emerson Radio vs. VOXX International | Emerson Radio vs. LG Display Co | Emerson Radio vs. Vizio Holding Corp | Emerson Radio vs. Turtle Beach Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |