Correlation Between IPG Photonics and Paysafe
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Paysafe 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 Paysafe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Paysafe, you can compare the effects of market volatilities on IPG Photonics and Paysafe 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 Paysafe. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Paysafe.
Diversification Opportunities for IPG Photonics and Paysafe
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IPG and Paysafe is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Paysafe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paysafe 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 Paysafe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paysafe has no effect on the direction of IPG Photonics i.e., IPG Photonics and Paysafe go up and down completely randomly.
Pair Corralation between IPG Photonics and Paysafe
Given the investment horizon of 90 days IPG Photonics is expected to under-perform the Paysafe. But the stock apears to be less risky and, when comparing its historical volatility, IPG Photonics is 1.66 times less risky than Paysafe. The stock trades about -0.02 of its potential returns per unit of risk. The Paysafe is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,386 in Paysafe on September 1, 2024 and sell it today you would earn a total of 602.00 from holding Paysafe or generate 43.43% 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. Paysafe
Performance |
| Timeline |
| IPG Photonics |
| Paysafe |
IPG Photonics and Paysafe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Paysafe
The main advantage of trading using opposite IPG Photonics and Paysafe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Paysafe 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 Paysafe will offset losses from the drop in Paysafe's long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Paysafe vs. Skillz Platform | Paysafe vs. SoFi Technologies | Paysafe vs. Clover Health Investments | Paysafe vs. Opendoor Technologies |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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