Correlation Between IPG Photonics and Weyco
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Weyco 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 Weyco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Weyco Group, you can compare the effects of market volatilities on IPG Photonics and Weyco 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 Weyco. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Weyco.
Diversification Opportunities for IPG Photonics and Weyco
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IPG and Weyco is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Weyco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weyco Group 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 Weyco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weyco Group has no effect on the direction of IPG Photonics i.e., IPG Photonics and Weyco go up and down completely randomly.
Pair Corralation between IPG Photonics and Weyco
Given the investment horizon of 90 days IPG Photonics is expected to under-perform the Weyco. In addition to that, IPG Photonics is 1.03 times more volatile than Weyco Group. It trades about 0.0 of its total potential returns per unit of risk. Weyco Group is currently generating about 0.05 per unit of volatility. If you would invest 2,425 in Weyco Group on August 24, 2024 and sell it today you would earn a total of 1,220 from holding Weyco Group or generate 50.31% 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. Weyco Group
Performance |
| Timeline |
| IPG Photonics |
| Weyco Group |
IPG Photonics and Weyco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Weyco
The main advantage of trading using opposite IPG Photonics and Weyco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Weyco 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 Weyco will offset losses from the drop in Weyco's long position.| IPG Photonics vs. Cohu Inc | IPG Photonics vs. Entegris | IPG Photonics vs. Veeco Instruments | IPG Photonics vs. Ultra Clean Holdings |
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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