Correlation Between MKS Instruments and IPG Photonics
Can any of the company-specific risk be diversified away by investing in both MKS Instruments and IPG Photonics 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 MKS Instruments and IPG Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MKS Instruments and IPG Photonics, you can compare the effects of market volatilities on MKS Instruments and IPG Photonics 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 MKS Instruments with a short position of IPG Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of MKS Instruments and IPG Photonics.
Diversification Opportunities for MKS Instruments and IPG Photonics
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MKS and IPG is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding MKS Instruments and IPG Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPG Photonics and MKS Instruments 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 MKS Instruments are associated (or correlated) with IPG Photonics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IPG Photonics has no effect on the direction of MKS Instruments i.e., MKS Instruments and IPG Photonics go up and down completely randomly.
Pair Corralation between MKS Instruments and IPG Photonics
Given the investment horizon of 90 days MKS Instruments is expected to generate 1.36 times more return on investment than IPG Photonics. However, MKS Instruments is 1.36 times more volatile than IPG Photonics. It trades about 0.06 of its potential returns per unit of risk. IPG Photonics is currently generating about -0.03 per unit of risk. If you would invest 7,929 in MKS Instruments on August 24, 2024 and sell it today you would earn a total of 3,442 from holding MKS Instruments or generate 43.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
MKS Instruments vs. IPG Photonics
Performance |
| Timeline |
| MKS Instruments |
| IPG Photonics |
MKS Instruments and IPG Photonics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MKS Instruments and IPG Photonics
The main advantage of trading using opposite MKS Instruments and IPG Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MKS Instruments position performs unexpectedly, IPG Photonics 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 IPG Photonics will offset losses from the drop in IPG Photonics' long position.| MKS Instruments vs. Vontier Corp | MKS Instruments vs. Teledyne Technologies Incorporated | MKS Instruments vs. ESCO Technologies | MKS Instruments vs. Sensata Technologies Holding |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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