Correlation Between IPG Photonics and Edwards Lifesciences
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Edwards Lifesciences 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 Edwards Lifesciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Edwards Lifesciences Corp, you can compare the effects of market volatilities on IPG Photonics and Edwards Lifesciences 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 Edwards Lifesciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Edwards Lifesciences.
Diversification Opportunities for IPG Photonics and Edwards Lifesciences
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IPG and Edwards is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Edwards Lifesciences Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edwards Lifesciences Corp 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 Edwards Lifesciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edwards Lifesciences Corp has no effect on the direction of IPG Photonics i.e., IPG Photonics and Edwards Lifesciences go up and down completely randomly.
Pair Corralation between IPG Photonics and Edwards Lifesciences
Given the investment horizon of 90 days IPG Photonics is expected to generate 1.46 times more return on investment than Edwards Lifesciences. However, IPG Photonics is 1.46 times more volatile than Edwards Lifesciences Corp. It trades about -0.02 of its potential returns per unit of risk. Edwards Lifesciences Corp is currently generating about -0.19 per unit of risk. If you would invest 8,924 in IPG Photonics on January 26, 2024 and sell it today you would lose (119.00) from holding IPG Photonics or give up 1.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
IPG Photonics vs. Edwards Lifesciences Corp
Performance |
| Timeline |
| IPG Photonics |
| Edwards Lifesciences Corp |
IPG Photonics and Edwards Lifesciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Edwards Lifesciences
The main advantage of trading using opposite IPG Photonics and Edwards Lifesciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Edwards Lifesciences 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 Edwards Lifesciences will offset losses from the drop in Edwards Lifesciences' long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Edwards Lifesciences vs. Orthopediatrics Corp | Edwards Lifesciences vs. iRhythm Technologies | Edwards Lifesciences vs. Electromed | Edwards Lifesciences vs. Varex Imaging Corp |
Check out your portfolio center.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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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