Correlation Between Rivian Automotive and IPG Photonics
Can any of the company-specific risk be diversified away by investing in both Rivian Automotive 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 Rivian Automotive and IPG Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rivian Automotive and IPG Photonics, you can compare the effects of market volatilities on Rivian Automotive 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 Rivian Automotive with a short position of IPG Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rivian Automotive and IPG Photonics.
Diversification Opportunities for Rivian Automotive and IPG Photonics
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Rivian and IPG is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and IPG Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPG Photonics and Rivian Automotive 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 Rivian Automotive 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 Rivian Automotive i.e., Rivian Automotive and IPG Photonics go up and down completely randomly.
Pair Corralation between Rivian Automotive and IPG Photonics
Given the investment horizon of 90 days Rivian Automotive is expected to under-perform the IPG Photonics. In addition to that, Rivian Automotive is 2.05 times more volatile than IPG Photonics. It trades about -0.01 of its total potential returns per unit of risk. IPG Photonics is currently generating about -0.01 per unit of volatility. If you would invest 9,752 in IPG Photonics on September 3, 2024 and sell it today you would lose (1,948) from holding IPG Photonics or give up 19.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rivian Automotive vs. IPG Photonics
Performance |
| Timeline |
| Rivian Automotive |
| IPG Photonics |
Rivian Automotive and IPG Photonics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rivian Automotive and IPG Photonics
The main advantage of trading using opposite Rivian Automotive and IPG Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rivian Automotive 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.| Rivian Automotive vs. GreenPower Motor | Rivian Automotive vs. ZEEKR Intelligent Technology | Rivian Automotive vs. Volcon Inc | Rivian Automotive vs. ECD Automotive Design |
| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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