Correlation Between IPG Photonics and Sun Life
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Sun Life 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 Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Sun Life Financial, you can compare the effects of market volatilities on IPG Photonics and Sun Life 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 Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Sun Life.
Diversification Opportunities for IPG Photonics and Sun Life
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IPG and Sun is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Sun Life Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Financial 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 Sun Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Life Financial has no effect on the direction of IPG Photonics i.e., IPG Photonics and Sun Life go up and down completely randomly.
Pair Corralation between IPG Photonics and Sun Life
Given the investment horizon of 90 days IPG Photonics is expected to under-perform the Sun Life. In addition to that, IPG Photonics is 1.99 times more volatile than Sun Life Financial. It trades about -0.12 of its total potential returns per unit of risk. Sun Life Financial is currently generating about 0.36 per unit of volatility. If you would invest 5,600 in Sun Life Financial on August 31, 2024 and sell it today you would earn a total of 539.00 from holding Sun Life Financial or generate 9.63% 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. Sun Life Financial
Performance |
| Timeline |
| IPG Photonics |
| Sun Life Financial |
IPG Photonics and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Sun Life
The main advantage of trading using opposite IPG Photonics and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Sun Life 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 Sun Life will offset losses from the drop in Sun Life's long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Sun Life vs. American International Group | Sun Life vs. Hartford Financial Services | Sun Life vs. Goosehead Insurance | Sun Life vs. Enstar Group Limited |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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