Correlation Between Enlight Renewable and IPG Photonics

Can any of the company-specific risk be diversified away by investing in both Enlight Renewable 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 Enlight Renewable and IPG Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Enlight Renewable Energy and IPG Photonics, you can compare the effects of market volatilities on Enlight Renewable 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 Enlight Renewable with a short position of IPG Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enlight Renewable and IPG Photonics.

Diversification Opportunities for Enlight Renewable and IPG Photonics

-0.21

Correlation Coefficient

Enlight Renewable  IPG Photonics

Very good diversification

The 3 months correlation between Enlight and IPG is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Enlight Renewable Energy and IPG Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPG Photonics and Enlight Renewable 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 Enlight Renewable Energy 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 Enlight Renewable i.e., Enlight Renewable and IPG Photonics go up and down completely randomly.

Pair Corralation between Enlight Renewable and IPG Photonics

Given the investment horizon of 90 days Enlight Renewable Energy is expected to generate 0.9 times more return on investment than IPG Photonics. However, Enlight Renewable Energy is 1.11 times less risky than IPG Photonics. It trades about -0.06 of its potential returns per unit of risk. IPG Photonics is currently generating about -0.08 per unit of risk. If you would invest  1,746  in Enlight Renewable Energy on December 26, 2024 and sell it today you would lose (151.00) from holding Enlight Renewable Energy or give up 8.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Enlight Renewable Energy  vs.  IPG Photonics

Enlight Renewable Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enlight Renewable Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

IPG Photonics

Risk-Adjusted Performance

Very Weak

Over the last 90 days IPG Photonics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Enlight Renewable and IPG Photonics

The main advantage of trading using opposite Enlight Renewable and IPG Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enlight Renewable 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.

The idea behind Enlight Renewable Energy and IPG Photonics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.