Correlation Between IPG Photonics and Unity Software
Can any of the company-specific risk be diversified away by investing in both IPG Photonics and Unity Software 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 Unity Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPG Photonics and Unity Software, you can compare the effects of market volatilities on IPG Photonics and Unity Software 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 Unity Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPG Photonics and Unity Software.
Diversification Opportunities for IPG Photonics and Unity Software
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IPG and Unity is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding IPG Photonics and Unity Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Software 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 Unity Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Software has no effect on the direction of IPG Photonics i.e., IPG Photonics and Unity Software go up and down completely randomly.
Pair Corralation between IPG Photonics and Unity Software
Given the investment horizon of 90 days IPG Photonics is expected to generate 2.28 times less return on investment than Unity Software. But when comparing it to its historical volatility, IPG Photonics is 2.58 times less risky than Unity Software. It trades about 0.44 of its potential returns per unit of risk. Unity Software is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 2,420 in Unity Software on April 30, 2025 and sell it today you would earn a total of 929.00 from holding Unity Software or generate 38.39% 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. Unity Software
Performance |
| Timeline |
| IPG Photonics |
| Unity Software |
IPG Photonics and Unity Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPG Photonics and Unity Software
The main advantage of trading using opposite IPG Photonics and Unity Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPG Photonics position performs unexpectedly, Unity Software 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 Unity Software will offset losses from the drop in Unity Software's long position.| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Cohu Inc |
| Unity Software vs. Zoom Video Communications | Unity Software vs. C3 Ai Inc | Unity Software vs. Shopify Class A | Unity Software vs. Salesforce |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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