Correlation Between IPG Photonics and Ralph Lauren

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Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Ralph Lauren 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 Ralph Lauren into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Ralph Lauren Corp, you can compare the effects of market volatilities on IPG Photonics and Ralph Lauren 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 Ralph Lauren. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Ralph Lauren.

Diversification Opportunities for IPG Photonics and Ralph Lauren

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between IPG and Ralph is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Ralph Lauren Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ralph Lauren Corp 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 Ralph Lauren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ralph Lauren Corp has no effect on the direction of IPG Photonics i.e., IPG Photonics and Ralph Lauren go up and down completely randomly.

Pair Corralation between IPG Photonics and Ralph Lauren

Given the investment horizon of 90 days IPG Photonics is expected to under-perform the Ralph Lauren. In addition to that, IPG Photonics is 1.4 times more volatile than Ralph Lauren Corp. It trades about -0.14 of its total potential returns per unit of risk. Ralph Lauren Corp is currently generating about 0.15 per unit of volatility. If you would invest  22,000  in Ralph Lauren Corp on September 24, 2024 and sell it today you would earn a total of  1,028  from holding Ralph Lauren Corp or generate 4.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

IPG Photonics  vs.  Ralph Lauren Corp

 Performance 
       Timeline  
IPG Photonics 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in IPG Photonics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, IPG Photonics is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
Ralph Lauren Corp 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Ralph Lauren Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, Ralph Lauren disclosed solid returns over the last few months and may actually be approaching a breakup point.

IPG Photonics and Ralph Lauren Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IPG Photonics and Ralph Lauren

The main advantage of trading using opposite IPG Photonics and Ralph Lauren positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Ralph Lauren 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 Ralph Lauren will offset losses from the drop in Ralph Lauren's long position.
The idea behind IPG Photonics and Ralph Lauren Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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