Correlation Between IPG Photonics and Nokia Corp
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Nokia Corp 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 Nokia Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Nokia Corp ADR, you can compare the effects of market volatilities on IPG Photonics and Nokia Corp 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 Nokia Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Nokia Corp.
Diversification Opportunities for IPG Photonics and Nokia Corp
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IPG and Nokia is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Nokia Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokia Corp ADR 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 Nokia Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nokia Corp ADR has no effect on the direction of IPG Photonics i.e., IPG Photonics and Nokia Corp go up and down completely randomly.
Pair Corralation between IPG Photonics and Nokia Corp
Given the investment horizon of 90 days IPG Photonics is expected to generate 1.47 times more return on investment than Nokia Corp. However, IPG Photonics is 1.47 times more volatile than Nokia Corp ADR. It trades about 0.01 of its potential returns per unit of risk. Nokia Corp ADR is currently generating about -0.39 per unit of risk. If you would invest 7,927 in IPG Photonics on August 27, 2024 and sell it today you would lose (35.00) from holding IPG Photonics or give up 0.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. Nokia Corp ADR
Performance |
| Timeline |
| IPG Photonics |
| Nokia Corp ADR |
IPG Photonics and Nokia Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Nokia Corp
The main advantage of trading using opposite IPG Photonics and Nokia Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Nokia Corp 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 Nokia Corp will offset losses from the drop in Nokia Corp's long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Nokia Corp vs. Ichor Holdings | Nokia Corp vs. Fabrinet | Nokia Corp vs. Hello Group | Nokia Corp vs. Ultra Clean 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 CEOs Directory module to screen CEOs from public companies around the world.
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