Correlation Between IPG Photonics and Western Sierra
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Western Sierra 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 Western Sierra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Western Sierra Mining, you can compare the effects of market volatilities on IPG Photonics and Western Sierra 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 Western Sierra. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Western Sierra.
Diversification Opportunities for IPG Photonics and Western Sierra
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IPG and Western is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Western Sierra Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Sierra Mining 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 Western Sierra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Sierra Mining has no effect on the direction of IPG Photonics i.e., IPG Photonics and Western Sierra go up and down completely randomly.
Pair Corralation between IPG Photonics and Western Sierra
Given the investment horizon of 90 days IPG Photonics is expected to under-perform the Western Sierra. In addition to that, IPG Photonics is 5.06 times more volatile than Western Sierra Mining. It trades about -0.07 of its total potential returns per unit of risk. Western Sierra Mining is currently generating about 0.0 per unit of volatility. If you would invest 0.68 in Western Sierra Mining on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Western Sierra Mining or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
IPG Photonics vs. Western Sierra Mining
Performance |
| Timeline |
| IPG Photonics |
| Western Sierra Mining |
IPG Photonics and Western Sierra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Western Sierra
The main advantage of trading using opposite IPG Photonics and Western Sierra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Western Sierra 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 Western Sierra will offset losses from the drop in Western Sierra's long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Western Sierra vs. Green Cures Botanical | Western Sierra vs. Cann American Corp | Western Sierra vs. Rimrock Gold Corp | Western Sierra vs. Galexxy 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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