Correlation Between IPG Photonics and 26442UAB0

Can any of the company-specific risk be diversified away by investing in both IPG Photonics and 26442UAB0 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 26442UAB0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IPG Photonics and DUKE ENERGY PROGRESS, you can compare the effects of market volatilities on IPG Photonics and 26442UAB0 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 26442UAB0. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and 26442UAB0.

Diversification Opportunities for IPG Photonics and 26442UAB0

0.29

Correlation Coefficient

IPG Photonics  26442UAB0

Modest diversification

The 3 months correlation between IPG and 26442UAB0 is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and DUKE ENERGY PROGRESS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DUKE ENERGY PROGRESS 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 26442UAB0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DUKE ENERGY PROGRESS has no effect on the direction of IPG Photonics i.e., IPG Photonics and 26442UAB0 go up and down completely randomly.

Pair Corralation between IPG Photonics and 26442UAB0

Given the investment horizon of 90 days IPG Photonics is expected to under-perform the 26442UAB0. But the stock apears to be less risky and, when comparing its historical volatility, IPG Photonics is 54.87 times less risky than 26442UAB0. The stock trades about -0.03 of its potential returns per unit of risk. The DUKE ENERGY PROGRESS is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  9,070  in DUKE ENERGY PROGRESS on October 23, 2024 and sell it today you would lose (232.00) from holding DUKE ENERGY PROGRESS or give up 2.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	75.96%
Values	Daily Returns

IPG Photonics  vs.  DUKE ENERGY PROGRESS

IPG Photonics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IPG Photonics has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

DUKE ENERGY PROGRESS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DUKE ENERGY PROGRESS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, 26442UAB0 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with IPG Photonics and 26442UAB0

The main advantage of trading using opposite IPG Photonics and 26442UAB0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, 26442UAB0 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 26442UAB0 will offset losses from the drop in 26442UAB0's long position.

The idea behind IPG Photonics and DUKE ENERGY PROGRESS 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.