Correlation Between IPG Photonics and Neogen
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Neogen 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 Neogen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Neogen, you can compare the effects of market volatilities on IPG Photonics and Neogen 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 Neogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Neogen.
Diversification Opportunities for IPG Photonics and Neogen
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IPG and Neogen is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Neogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neogen 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 Neogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neogen has no effect on the direction of IPG Photonics i.e., IPG Photonics and Neogen go up and down completely randomly.
Pair Corralation between IPG Photonics and Neogen
Given the investment horizon of 90 days IPG Photonics is expected to under-perform the Neogen. But the stock apears to be less risky and, when comparing its historical volatility, IPG Photonics is 1.4 times less risky than Neogen. The stock trades about -0.06 of its potential returns per unit of risk. The Neogen is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,443 in Neogen on September 3, 2024 and sell it today you would lose (25.00) from holding Neogen or give up 1.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. Neogen
Performance |
| Timeline |
| IPG Photonics |
| Neogen |
IPG Photonics and Neogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Neogen
The main advantage of trading using opposite IPG Photonics and Neogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Neogen 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 Neogen will offset losses from the drop in Neogen's long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Neogen vs. Qiagen NV | Neogen vs. Aclaris Therapeutics | Neogen vs. IQVIA Holdings | Neogen vs. Medpace Holdings |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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