Correlation Between IPG Photonics and Spectrum Brands
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Spectrum Brands 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 Spectrum Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Spectrum Brands Holdings, you can compare the effects of market volatilities on IPG Photonics and Spectrum Brands 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 Spectrum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Spectrum Brands.
Diversification Opportunities for IPG Photonics and Spectrum Brands
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between IPG and Spectrum is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Spectrum Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Brands Holdings 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 Spectrum Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Brands Holdings has no effect on the direction of IPG Photonics i.e., IPG Photonics and Spectrum Brands go up and down completely randomly.
Pair Corralation between IPG Photonics and Spectrum Brands
Given the investment horizon of 90 days IPG Photonics is expected to generate 5.59 times less return on investment than Spectrum Brands. In addition to that, IPG Photonics is 1.58 times more volatile than Spectrum Brands Holdings. It trades about 0.01 of its total potential returns per unit of risk. Spectrum Brands Holdings is currently generating about 0.05 per unit of volatility. If you would invest 9,012 in Spectrum Brands Holdings on August 28, 2024 and sell it today you would earn a total of 154.00 from holding Spectrum Brands Holdings or generate 1.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. Spectrum Brands Holdings
Performance |
| Timeline |
| IPG Photonics |
| Spectrum Brands Holdings |
IPG Photonics and Spectrum Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Spectrum Brands
The main advantage of trading using opposite IPG Photonics and Spectrum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Spectrum Brands 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 Spectrum Brands will offset losses from the drop in Spectrum Brands' long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Spectrum Brands vs. European Wax Center | Spectrum Brands vs. Inter Parfums | Spectrum Brands vs. Mannatech Incorporated | Spectrum Brands vs. Nu Skin Enterprises |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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