Correlation Between IPG Photonics and Minerals Technologies
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Minerals 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 Minerals 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 Minerals Technologies, you can compare the effects of market volatilities on IPG Photonics and Minerals 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 Minerals Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Minerals Technologies.
Diversification Opportunities for IPG Photonics and Minerals Technologies
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IPG and Minerals is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals 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 Minerals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerals Technologies has no effect on the direction of IPG Photonics i.e., IPG Photonics and Minerals Technologies go up and down completely randomly.
Pair Corralation between IPG Photonics and Minerals Technologies
Given the investment horizon of 90 days IPG Photonics is expected to generate 1.75 times less return on investment than Minerals Technologies. In addition to that, IPG Photonics is 1.21 times more volatile than Minerals Technologies. It trades about 0.07 of its total potential returns per unit of risk. Minerals Technologies is currently generating about 0.16 per unit of volatility. If you would invest 7,706 in Minerals Technologies on August 24, 2024 and sell it today you would earn a total of 633.00 from holding Minerals Technologies or generate 8.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. Minerals Technologies
Performance |
| Timeline |
| IPG Photonics |
| Minerals Technologies |
IPG Photonics and Minerals Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Minerals Technologies
The main advantage of trading using opposite IPG Photonics and Minerals Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Minerals 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 Minerals Technologies will offset losses from the drop in Minerals Technologies' long position.| IPG Photonics vs. Cohu Inc | IPG Photonics vs. Entegris | IPG Photonics vs. Veeco Instruments | IPG Photonics vs. Ultra Clean Holdings |
| Minerals Technologies vs. Quaker Chemical | Minerals Technologies vs. Innospec | Minerals Technologies vs. H B Fuller | Minerals Technologies vs. Cabot |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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