Correlation Between IPG Photonics and Northern Lion
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Northern Lion 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 Northern Lion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Northern Lion Gold, you can compare the effects of market volatilities on IPG Photonics and Northern Lion 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 Northern Lion. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Northern Lion.
Diversification Opportunities for IPG Photonics and Northern Lion
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IPG and Northern is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Northern Lion Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lion Gold 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 Northern Lion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Lion Gold has no effect on the direction of IPG Photonics i.e., IPG Photonics and Northern Lion go up and down completely randomly.
Pair Corralation between IPG Photonics and Northern Lion
Given the investment horizon of 90 days IPG Photonics is expected to generate 1.37 times more return on investment than Northern Lion. However, IPG Photonics is 1.37 times more volatile than Northern Lion Gold. It trades about 0.0 of its potential returns per unit of risk. Northern Lion Gold is currently generating about -0.04 per unit of risk. If you would invest 9,283 in IPG Photonics on September 14, 2024 and sell it today you would lose (1,532) from holding IPG Photonics or give up 16.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
IPG Photonics vs. Northern Lion Gold
Performance |
| Timeline |
| IPG Photonics |
| Northern Lion Gold |
IPG Photonics and Northern Lion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Northern Lion
The main advantage of trading using opposite IPG Photonics and Northern Lion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Northern Lion 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 Northern Lion will offset losses from the drop in Northern Lion's long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Northern Lion vs. NH Foods Ltd | Northern Lion vs. FitLife Brands, Common | Northern Lion vs. AMCON Distributing | Northern Lion vs. IPG Photonics |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |