Correlation Between Simon Property and IPG Photonics
Can any of the company-specific risk be diversified away by investing in both Simon Property 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 Simon Property and IPG Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simon Property Group and IPG Photonics, you can compare the effects of market volatilities on Simon Property 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 Simon Property with a short position of IPG Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simon Property and IPG Photonics.
Diversification Opportunities for Simon Property and IPG Photonics
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Simon and IPG is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and IPG Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPG Photonics and Simon Property 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 Simon Property Group 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 Simon Property i.e., Simon Property and IPG Photonics go up and down completely randomly.
Pair Corralation between Simon Property and IPG Photonics
Assuming the 90 days trading horizon Simon Property Group is expected to generate 0.54 times more return on investment than IPG Photonics. However, Simon Property Group is 1.84 times less risky than IPG Photonics. It trades about 0.03 of its potential returns per unit of risk. IPG Photonics is currently generating about -0.02 per unit of risk. If you would invest 5,042 in Simon Property Group on November 2, 2024 and sell it today you would earn a total of 908.00 from holding Simon Property Group or generate 18.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simon Property Group vs. IPG Photonics
Performance |
| Timeline |
| Simon Property Group |
| IPG Photonics |
Simon Property and IPG Photonics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simon Property and IPG Photonics
The main advantage of trading using opposite Simon Property and IPG Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simon Property 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.| Simon Property vs. Kimco Realty | Simon Property vs. Saul Centers | Simon Property vs. Saul Centers | Simon Property vs. Urban Edge Properties |
| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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