Correlation Between IPG Photonics and Orbit Drop
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Orbit Drop 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 Orbit Drop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Orbit Drop, you can compare the effects of market volatilities on IPG Photonics and Orbit Drop 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 Orbit Drop. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Orbit Drop.
Diversification Opportunities for IPG Photonics and Orbit Drop
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IPG and Orbit is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Orbit Drop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbit Drop 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 Orbit Drop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbit Drop has no effect on the direction of IPG Photonics i.e., IPG Photonics and Orbit Drop go up and down completely randomly.
Pair Corralation between IPG Photonics and Orbit Drop
Given the investment horizon of 90 days IPG Photonics is expected to under-perform the Orbit Drop. But the stock apears to be less risky and, when comparing its historical volatility, IPG Photonics is 69.55 times less risky than Orbit Drop. The stock trades about 0.0 of its potential returns per unit of risk. The Orbit Drop is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Orbit Drop on August 26, 2024 and sell it today you would earn a total of 0.01 from holding Orbit Drop or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 15.69% |
| Values | Daily Returns |
IPG Photonics vs. Orbit Drop
Performance |
| Timeline |
| IPG Photonics |
| Orbit Drop |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IPG Photonics and Orbit Drop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Orbit Drop
The main advantage of trading using opposite IPG Photonics and Orbit Drop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Orbit Drop 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 Orbit Drop will offset losses from the drop in Orbit Drop's long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Orbit Drop vs. Advanced Micro Devices | Orbit Drop vs. IPG Photonics | Orbit Drop vs. Naked Wines plc | Orbit Drop vs. Vodka Brands Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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