Correlation Between IPG Photonics and Park Electrochemical
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Park Electrochemical 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 Park Electrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Park Electrochemical, you can compare the effects of market volatilities on IPG Photonics and Park Electrochemical 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 Park Electrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Park Electrochemical.
Diversification Opportunities for IPG Photonics and Park Electrochemical
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IPG and Park is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Park Electrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Electrochemical 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 Park Electrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Electrochemical has no effect on the direction of IPG Photonics i.e., IPG Photonics and Park Electrochemical go up and down completely randomly.
Pair Corralation between IPG Photonics and Park Electrochemical
Given the investment horizon of 90 days IPG Photonics is expected to generate 21.61 times less return on investment than Park Electrochemical. In addition to that, IPG Photonics is 1.28 times more volatile than Park Electrochemical. It trades about 0.01 of its total potential returns per unit of risk. Park Electrochemical is currently generating about 0.17 per unit of volatility. If you would invest 1,429 in Park Electrochemical on August 27, 2024 and sell it today you would earn a total of 109.00 from holding Park Electrochemical or generate 7.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. Park Electrochemical
Performance |
| Timeline |
| IPG Photonics |
| Park Electrochemical |
IPG Photonics and Park Electrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Park Electrochemical
The main advantage of trading using opposite IPG Photonics and Park Electrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Park Electrochemical 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 Park Electrochemical will offset losses from the drop in Park Electrochemical's long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Park Electrochemical vs. Innovative Solutions and | Park Electrochemical vs. VSE Corporation | Park Electrochemical vs. Curtiss Wright | Park Electrochemical vs. Ducommun Incorporated |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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