Correlation Between IPG Photonics and VARNO

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

By analyzing existing cross correlation between IPG Photonics and VARNO 8 15 NOV 32, you can compare the effects of market volatilities on IPG Photonics and VARNO 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 VARNO. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and VARNO.

Diversification Opportunities for IPG Photonics and VARNO

-0.33

Correlation Coefficient

IPG Photonics  VARNO

Very good diversification

The 3 months correlation between IPG and VARNO is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and VARNO 8 15 NOV 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VARNO 8 15 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 VARNO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VARNO 8 15 has no effect on the direction of IPG Photonics i.e., IPG Photonics and VARNO go up and down completely randomly.

Pair Corralation between IPG Photonics and VARNO

Given the investment horizon of 90 days IPG Photonics is expected to generate 1.04 times more return on investment than VARNO. However, IPG Photonics is 1.04 times more volatile than VARNO 8 15 NOV 32. It trades about 0.06 of its potential returns per unit of risk. VARNO 8 15 NOV 32 is currently generating about -0.19 per unit of risk. If you would invest  7,639  in IPG Photonics on September 14, 2024 and sell it today you would earn a total of  173.00  from holding IPG Photonics or generate 2.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.19%
Values	Daily Returns

IPG Photonics  vs.  VARNO 8 15 NOV 32

IPG Photonics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IPG Photonics are ranked lower than 7 (%) 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.

VARNO 8 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VARNO 8 15 NOV 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for VARNO 8 15 NOV 32 investors.

Pair Trading with IPG Photonics and VARNO

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

The idea behind IPG Photonics and VARNO 8 15 NOV 32 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..