Correlation Between IPG Photonics and CTS
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and CTS 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 IPG Photonics and CTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and CTS Corporation, you can compare the effects of market volatilities on IPG Photonics and CTS 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 IPG Photonics with a short position of CTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and CTS.
Diversification Opportunities for IPG Photonics and CTS
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IPG and CTS is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and CTS Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTS Corporation and IPG Photonics 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 IPG Photonics are associated (or correlated) with CTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTS Corporation has no effect on the direction of IPG Photonics i.e., IPG Photonics and CTS go up and down completely randomly.
Pair Corralation between IPG Photonics and CTS
Given the investment horizon of 90 days IPG Photonics is expected to generate 1.24 times more return on investment than CTS. However, IPG Photonics is 1.24 times more volatile than CTS Corporation. It trades about -0.34 of its potential returns per unit of risk. CTS Corporation is currently generating about -0.43 per unit of risk. If you would invest 7,017 in IPG Photonics on December 5, 2024 and sell it today you would lose (980.00) from holding IPG Photonics or give up 13.97% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
IPG Photonics vs. CTS Corp.
Performance |
Timeline |
IPG Photonics |
CTS Corporation |
IPG Photonics and CTS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IPG Photonics and CTS
The main advantage of trading using opposite IPG Photonics and CTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, CTS 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 CTS will offset losses from the drop in CTS's long position.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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |