Correlation Between IPG Photonics and Wendys
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Wendys 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 Wendys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and The Wendys Co, you can compare the effects of market volatilities on IPG Photonics and Wendys 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 Wendys. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Wendys.
Diversification Opportunities for IPG Photonics and Wendys
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IPG and Wendys is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys 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 Wendys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Wendys has no effect on the direction of IPG Photonics i.e., IPG Photonics and Wendys go up and down completely randomly.
Pair Corralation between IPG Photonics and Wendys
Given the investment horizon of 90 days IPG Photonics is expected to generate 2.14 times more return on investment than Wendys. However, IPG Photonics is 2.14 times more volatile than The Wendys Co. It trades about 0.0 of its potential returns per unit of risk. The Wendys Co is currently generating about -0.15 per unit of risk. If you would invest 7,833 in IPG Photonics on September 13, 2024 and sell it today you would lose (60.00) from holding IPG Photonics or give up 0.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. The Wendys Co
Performance |
| Timeline |
| IPG Photonics |
| The Wendys |
IPG Photonics and Wendys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Wendys
The main advantage of trading using opposite IPG Photonics and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Wendys 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 Wendys will offset losses from the drop in Wendys' long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Wendys vs. Yum Brands | Wendys vs. Dominos Pizza | Wendys vs. Darden Restaurants | Wendys vs. Papa Johns International |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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