Correlation Between IPG Photonics and Live Ventures
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Live Ventures 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 Live Ventures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Live Ventures, you can compare the effects of market volatilities on IPG Photonics and Live Ventures 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 Live Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Live Ventures.
Diversification Opportunities for IPG Photonics and Live Ventures
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IPG and Live is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Live Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Ventures 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 Live Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Ventures has no effect on the direction of IPG Photonics i.e., IPG Photonics and Live Ventures go up and down completely randomly.
Pair Corralation between IPG Photonics and Live Ventures
Given the investment horizon of 90 days IPG Photonics is expected to under-perform the Live Ventures. But the stock apears to be less risky and, when comparing its historical volatility, IPG Photonics is 1.58 times less risky than Live Ventures. The stock trades about -0.22 of its potential returns per unit of risk. The Live Ventures is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 1,009 in Live Ventures on December 2, 2024 and sell it today you would lose (205.00) from holding Live Ventures or give up 20.32% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
IPG Photonics vs. Live Ventures
Performance |
Timeline |
IPG Photonics |
Live Ventures |
IPG Photonics and Live Ventures Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IPG Photonics and Live Ventures
The main advantage of trading using opposite IPG Photonics and Live Ventures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Live Ventures 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 Live Ventures will offset losses from the drop in Live Ventures' long position.IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
Live Ventures vs. Arhaus Inc | Live Ventures vs. Floor Decor Holdings | Live Ventures vs. Haverty Furniture Companies | Live Ventures vs. Kingfisher plc |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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