Correlation Between 958102AQ8 and IPG Photonics

Can any of the company-specific risk be diversified away by investing in both 958102AQ8 and IPG Photonics 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 958102AQ8 and IPG Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WDC 285 01 FEB 29 and IPG Photonics, you can compare the effects of market volatilities on 958102AQ8 and IPG Photonics 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 958102AQ8 with a short position of IPG Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of 958102AQ8 and IPG Photonics.

Diversification Opportunities for 958102AQ8 and IPG Photonics

0.32

Correlation Coefficient

958102AQ8  IPG Photonics

Weak diversification

The 3 months correlation between 958102AQ8 and IPG is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding WDC 285 01 FEB 29 and IPG Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPG Photonics and 958102AQ8 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 WDC 285 01 FEB 29 are associated (or correlated) with IPG Photonics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IPG Photonics has no effect on the direction of 958102AQ8 i.e., 958102AQ8 and IPG Photonics go up and down completely randomly.

Pair Corralation between 958102AQ8 and IPG Photonics

Assuming the 90 days trading horizon WDC 285 01 FEB 29 is expected to under-perform the IPG Photonics. But the bond apears to be less risky and, when comparing its historical volatility, WDC 285 01 FEB 29 is 1.43 times less risky than IPG Photonics. The bond trades about -0.1 of its potential returns per unit of risk. The IPG Photonics is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  7,622  in IPG Photonics on October 13, 2024 and sell it today you would lose (402.00) from holding IPG Photonics or give up 5.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

WDC 285 01 FEB 29  vs.  IPG Photonics

WDC 285 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WDC 285 01 FEB 29 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for WDC 285 01 FEB 29 investors.

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.

Pair Trading with 958102AQ8 and IPG Photonics

The main advantage of trading using opposite 958102AQ8 and IPG Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 958102AQ8 position performs unexpectedly, IPG Photonics 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 IPG Photonics will offset losses from the drop in IPG Photonics' long position.

The idea behind WDC 285 01 FEB 29 and IPG Photonics 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.