Correlation Between IPG Photonics and Vestis
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Vestis 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 Vestis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Vestis, you can compare the effects of market volatilities on IPG Photonics and Vestis 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 Vestis. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Vestis.
Diversification Opportunities for IPG Photonics and Vestis
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between IPG and Vestis is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Vestis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestis 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 Vestis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestis has no effect on the direction of IPG Photonics i.e., IPG Photonics and Vestis go up and down completely randomly.
Pair Corralation between IPG Photonics and Vestis
Given the investment horizon of 90 days IPG Photonics is expected to under-perform the Vestis. But the stock apears to be less risky and, when comparing its historical volatility, IPG Photonics is 1.68 times less risky than Vestis. The stock trades about -0.01 of its potential returns per unit of risk. The Vestis is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,908 in Vestis on September 3, 2024 and sell it today you would lose (300.00) from holding Vestis or give up 15.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 60.2% |
| Values | Daily Returns |
IPG Photonics vs. Vestis
Performance |
| Timeline |
| IPG Photonics |
| Vestis |
IPG Photonics and Vestis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Vestis
The main advantage of trading using opposite IPG Photonics and Vestis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Vestis 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 Vestis will offset losses from the drop in Vestis' long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Vestis vs. Celsius Holdings | Vestis vs. Eldorado Gold Corp | Vestis vs. Cementos Pacasmayo SAA | Vestis vs. IPG Photonics |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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