Correlation Between IPG Photonics and Ralph Lauren
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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
IPG Photonics vs. Ralph Lauren Corp
Performance |
Timeline |
IPG Photonics |
Ralph Lauren Corp |
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.IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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