Correlation Between IPG Photonics and Teradyne
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Teradyne 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 Teradyne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Teradyne, you can compare the effects of market volatilities on IPG Photonics and Teradyne 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 Teradyne. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Teradyne.
Diversification Opportunities for IPG Photonics and Teradyne
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IPG and Teradyne is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne 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 Teradyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradyne has no effect on the direction of IPG Photonics i.e., IPG Photonics and Teradyne go up and down completely randomly.
Pair Corralation between IPG Photonics and Teradyne
Given the investment horizon of 90 days IPG Photonics is expected to generate 0.89 times more return on investment than Teradyne. However, IPG Photonics is 1.13 times less risky than Teradyne. It trades about 0.01 of its potential returns per unit of risk. Teradyne is currently generating about -0.01 per unit of risk. If you would invest 7,185 in IPG Photonics on October 31, 2024 and sell it today you would earn a total of 19.00 from holding IPG Photonics or generate 0.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. Teradyne
Performance |
| Timeline |
| IPG Photonics |
| Teradyne |
IPG Photonics and Teradyne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Teradyne
The main advantage of trading using opposite IPG Photonics and Teradyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Teradyne 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 Teradyne will offset losses from the drop in Teradyne's long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Teradyne vs. IPG Photonics | Teradyne vs. Ultra Clean Holdings | Teradyne vs. Onto Innovation | Teradyne vs. Cohu Inc |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |