Correlation Between XBP Europe and IPG Photonics
Can any of the company-specific risk be diversified away by investing in both XBP Europe 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 XBP Europe and IPG Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XBP Europe Holdings and IPG Photonics, you can compare the effects of market volatilities on XBP Europe 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 XBP Europe with a short position of IPG Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of XBP Europe and IPG Photonics.
Diversification Opportunities for XBP Europe and IPG Photonics
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between XBP and IPG is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding XBP Europe Holdings and IPG Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPG Photonics and XBP Europe 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 XBP Europe Holdings 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 XBP Europe i.e., XBP Europe and IPG Photonics go up and down completely randomly.
Pair Corralation between XBP Europe and IPG Photonics
Assuming the 90 days horizon XBP Europe Holdings is expected to generate 15.14 times more return on investment than IPG Photonics. However, XBP Europe is 15.14 times more volatile than IPG Photonics. It trades about 0.14 of its potential returns per unit of risk. IPG Photonics is currently generating about 0.01 per unit of risk. If you would invest 4.00 in XBP Europe Holdings on August 28, 2024 and sell it today you would lose (0.61) from holding XBP Europe Holdings or give up 15.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 52.38% |
| Values | Daily Returns |
XBP Europe Holdings vs. IPG Photonics
Performance |
| Timeline |
| XBP Europe Holdings |
| IPG Photonics |
XBP Europe and IPG Photonics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XBP Europe and IPG Photonics
The main advantage of trading using opposite XBP Europe and IPG Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XBP Europe 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.| XBP Europe vs. GigaCloud Technology Class | XBP Europe vs. Arqit Quantum | XBP Europe vs. Telos Corp | XBP Europe vs. Cemtrex |
| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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