Correlation Between IPG Photonics and Onto Innovation
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Onto Innovation 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 Onto Innovation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Onto Innovation, you can compare the effects of market volatilities on IPG Photonics and Onto Innovation 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 Onto Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Onto Innovation.
Diversification Opportunities for IPG Photonics and Onto Innovation
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IPG and Onto is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Onto Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onto Innovation 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 Onto Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onto Innovation has no effect on the direction of IPG Photonics i.e., IPG Photonics and Onto Innovation go up and down completely randomly.
Pair Corralation between IPG Photonics and Onto Innovation
Given the investment horizon of 90 days IPG Photonics is expected to generate 19.84 times less return on investment than Onto Innovation. But when comparing it to its historical volatility, IPG Photonics is 1.38 times less risky than Onto Innovation. It trades about 0.03 of its potential returns per unit of risk. Onto Innovation is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest 17,245 in Onto Innovation on October 26, 2024 and sell it today you would earn a total of 4,459 from holding Onto Innovation or generate 25.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. Onto Innovation
Performance |
| Timeline |
| IPG Photonics |
| Onto Innovation |
IPG Photonics and Onto Innovation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Onto Innovation
The main advantage of trading using opposite IPG Photonics and Onto Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Onto Innovation 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 Onto Innovation will offset losses from the drop in Onto Innovation's long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Onto Innovation vs. Camtek | Onto Innovation vs. Amtech Systems | Onto Innovation vs. Veeco Instruments | Onto Innovation vs. Ichor 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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