Correlation Between IPG Photonics and OFX Group
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and OFX Group 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 OFX Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and OFX Group Ltd, you can compare the effects of market volatilities on IPG Photonics and OFX Group 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 OFX Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and OFX Group.
Diversification Opportunities for IPG Photonics and OFX Group
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IPG and OFX is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and OFX Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFX Group 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 OFX Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFX Group has no effect on the direction of IPG Photonics i.e., IPG Photonics and OFX Group go up and down completely randomly.
Pair Corralation between IPG Photonics and OFX Group
Given the investment horizon of 90 days IPG Photonics is expected to under-perform the OFX Group. But the stock apears to be less risky and, when comparing its historical volatility, IPG Photonics is 2.48 times less risky than OFX Group. The stock trades about -0.03 of its potential returns per unit of risk. The OFX Group Ltd is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 440.00 in OFX Group Ltd on October 17, 2024 and sell it today you would lose (5.00) from holding OFX Group Ltd or give up 1.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. OFX Group Ltd
Performance |
| Timeline |
| IPG Photonics |
| OFX Group |
IPG Photonics and OFX Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and OFX Group
The main advantage of trading using opposite IPG Photonics and OFX Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, OFX Group 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 OFX Group will offset losses from the drop in OFX Group's long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| OFX Group vs. Franklin Credit Management | OFX Group vs. IPG Photonics | OFX Group vs. Waste Management | OFX Group vs. Analog Devices |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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