Correlation Between IPG Photonics and EMERA

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

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

Diversification Opportunities for IPG Photonics and EMERA

0.0

Correlation Coefficient

IPG Photonics  EMERA

Pay attention - limited upside

The 3 months correlation between IPG and EMERA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and EMERA FIN LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMERA FIN LP 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 EMERA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMERA FIN LP has no effect on the direction of IPG Photonics i.e., IPG Photonics and EMERA go up and down completely randomly.

Pair Corralation between IPG Photonics and EMERA

If you would invest  6,577  in IPG Photonics on September 4, 2024 and sell it today you would earn a total of  1,394  from holding IPG Photonics or generate 21.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

IPG Photonics  vs.  EMERA FIN LP

IPG Photonics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IPG Photonics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, IPG Photonics reported solid returns over the last few months and may actually be approaching a breakup point.

EMERA FIN LP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EMERA FIN LP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, EMERA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IPG Photonics and EMERA

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

The idea behind IPG Photonics and EMERA FIN LP 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.