Correlation Between IPG Photonics and Micron Technology
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Micron Technology 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 Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Micron Technology, you can compare the effects of market volatilities on IPG Photonics and Micron Technology 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 Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Micron Technology.
Diversification Opportunities for IPG Photonics and Micron Technology
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IPG and Micron is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology 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 Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of IPG Photonics i.e., IPG Photonics and Micron Technology go up and down completely randomly.
Pair Corralation between IPG Photonics and Micron Technology
Given the investment horizon of 90 days IPG Photonics is expected to generate 0.6 times more return on investment than Micron Technology. However, IPG Photonics is 1.68 times less risky than Micron Technology. It trades about 0.06 of its potential returns per unit of risk. Micron Technology is currently generating about 0.03 per unit of risk. If you would invest 6,543 in IPG Photonics on November 2, 2024 and sell it today you would earn a total of 810.00 from holding IPG Photonics or generate 12.38% 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. Micron Technology
Performance |
| Timeline |
| IPG Photonics |
| Micron Technology |
IPG Photonics and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Micron Technology
The main advantage of trading using opposite IPG Photonics and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Micron Technology 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 Micron Technology will offset losses from the drop in Micron Technology's long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Micron Technology vs. NVIDIA | Micron Technology vs. Intel | Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. Marvell Technology Group |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |