Correlation Between IPG Photonics and Sweetgreen

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

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

Diversification Opportunities for IPG Photonics and Sweetgreen

0.42

Correlation Coefficient

IPG Photonics  Sweetgreen

Very weak diversification

The 3 months correlation between IPG and Sweetgreen is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Sweetgreen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sweetgreen 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 Sweetgreen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sweetgreen has no effect on the direction of IPG Photonics i.e., IPG Photonics and Sweetgreen go up and down completely randomly.

Pair Corralation between IPG Photonics and Sweetgreen

Given the investment horizon of 90 days IPG Photonics is expected to generate 0.47 times more return on investment than Sweetgreen. However, IPG Photonics is 2.11 times less risky than Sweetgreen. It trades about 0.11 of its potential returns per unit of risk. Sweetgreen is currently generating about -0.09 per unit of risk. If you would invest  7,274  in IPG Photonics on September 20, 2024 and sell it today you would earn a total of  360.00  from holding IPG Photonics or generate 4.95% 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.  Sweetgreen

IPG Photonics

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IPG Photonics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, IPG Photonics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sweetgreen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sweetgreen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Sweetgreen is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IPG Photonics and Sweetgreen

The main advantage of trading using opposite IPG Photonics and Sweetgreen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Sweetgreen 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 Sweetgreen will offset losses from the drop in Sweetgreen's long position.

The idea behind IPG Photonics and Sweetgreen 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.