Correlation Between IPG Photonics and ASML Holding
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and ASML Holding 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 ASML Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and ASML Holding NV, you can compare the effects of market volatilities on IPG Photonics and ASML Holding 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 ASML Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and ASML Holding.
Diversification Opportunities for IPG Photonics and ASML Holding
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IPG and ASML is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and ASML Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASML Holding NV 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 ASML Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASML Holding NV has no effect on the direction of IPG Photonics i.e., IPG Photonics and ASML Holding go up and down completely randomly.
Pair Corralation between IPG Photonics and ASML Holding
Given the investment horizon of 90 days IPG Photonics is expected to generate 1.26 times more return on investment than ASML Holding. However, IPG Photonics is 1.26 times more volatile than ASML Holding NV. It trades about 0.03 of its potential returns per unit of risk. ASML Holding NV is currently generating about 0.02 per unit of risk. If you would invest 6,353 in IPG Photonics on March 16, 2025 and sell it today you would earn a total of 238.00 from holding IPG Photonics or generate 3.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPG Photonics vs. ASML Holding NV
Performance |
| Timeline |
| IPG Photonics |
| ASML Holding NV |
IPG Photonics and ASML Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and ASML Holding
The main advantage of trading using opposite IPG Photonics and ASML Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, ASML Holding 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 ASML Holding will offset losses from the drop in ASML Holding's long position.| IPG Photonics vs. Entegris | IPG Photonics vs. KLA Tencor | IPG Photonics vs. Applied Materials | IPG Photonics vs. Thrivent High Yield |
| ASML Holding vs. Applied Materials | ASML Holding vs. KLA Tencor | ASML Holding vs. Axcelis Technologies | ASML Holding vs. Teradyne |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |