Correlation Between IPG Photonics and Sensient Technologies
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Sensient Technologies 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 Sensient Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Sensient Technologies, you can compare the effects of market volatilities on IPG Photonics and Sensient Technologies 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 Sensient Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Sensient Technologies.
Diversification Opportunities for IPG Photonics and Sensient Technologies
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IPG and Sensient is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Sensient Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensient Technologies 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 Sensient Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensient Technologies has no effect on the direction of IPG Photonics i.e., IPG Photonics and Sensient Technologies go up and down completely randomly.
Pair Corralation between IPG Photonics and Sensient Technologies
Given the investment horizon of 90 days IPG Photonics is expected to under-perform the Sensient Technologies. In addition to that, IPG Photonics is 1.56 times more volatile than Sensient Technologies. It trades about -0.03 of its total potential returns per unit of risk. Sensient Technologies is currently generating about 0.02 per unit of volatility. If you would invest 7,570 in Sensient Technologies on September 1, 2024 and sell it today you would earn a total of 194.00 from holding Sensient Technologies or generate 2.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. Sensient Technologies
Performance |
| Timeline |
| IPG Photonics |
| Sensient Technologies |
IPG Photonics and Sensient Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Sensient Technologies
The main advantage of trading using opposite IPG Photonics and Sensient Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Sensient Technologies 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 Sensient Technologies will offset losses from the drop in Sensient Technologies' long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Sensient Technologies vs. Innospec | Sensient Technologies vs. Minerals Technologies | Sensient Technologies vs. Oil Dri | Sensient Technologies vs. H B Fuller |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |