Correlation Between IPG Photonics and Pinterest
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Pinterest 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 Pinterest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Pinterest, you can compare the effects of market volatilities on IPG Photonics and Pinterest 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 Pinterest. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Pinterest.
Diversification Opportunities for IPG Photonics and Pinterest
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IPG and Pinterest is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Pinterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinterest 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 Pinterest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinterest has no effect on the direction of IPG Photonics i.e., IPG Photonics and Pinterest go up and down completely randomly.
Pair Corralation between IPG Photonics and Pinterest
Given the investment horizon of 90 days IPG Photonics is expected to generate 0.76 times more return on investment than Pinterest. However, IPG Photonics is 1.31 times less risky than Pinterest. It trades about -0.02 of its potential returns per unit of risk. Pinterest is currently generating about -0.07 per unit of risk. If you would invest 7,927 in IPG Photonics on August 27, 2024 and sell it today you would lose (148.00) from holding IPG Photonics or give up 1.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. Pinterest
Performance |
| Timeline |
| IPG Photonics |
IPG Photonics and Pinterest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Pinterest
The main advantage of trading using opposite IPG Photonics and Pinterest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Pinterest 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 Pinterest will offset losses from the drop in Pinterest's long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Pinterest vs. Alphabet Inc Class C | Pinterest vs. Twilio Inc | Pinterest vs. Snap Inc | Pinterest vs. Baidu Inc |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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