Correlation Between Materialise and Northland Power
Can any of the company-specific risk be diversified away by investing in both Materialise and Northland Power 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 Materialise and Northland Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Materialise NV and Northland Power, you can compare the effects of market volatilities on Materialise and Northland Power 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 Materialise with a short position of Northland Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materialise and Northland Power.
Diversification Opportunities for Materialise and Northland Power
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Materialise and Northland is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and Northland Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northland Power and Materialise 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 Materialise NV are associated (or correlated) with Northland Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northland Power has no effect on the direction of Materialise i.e., Materialise and Northland Power go up and down completely randomly.
Pair Corralation between Materialise and Northland Power
Assuming the 90 days trading horizon Materialise NV is expected to generate 1.04 times more return on investment than Northland Power. However, Materialise is 1.04 times more volatile than Northland Power. It trades about 0.05 of its potential returns per unit of risk. Northland Power is currently generating about 0.01 per unit of risk. If you would invest 575.00 in Materialise NV on September 15, 2024 and sell it today you would earn a total of 225.00 from holding Materialise NV or generate 39.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Materialise NV vs. Northland Power
Performance |
| Timeline |
| Materialise NV |
| Northland Power |
Materialise and Northland Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Materialise and Northland Power
The main advantage of trading using opposite Materialise and Northland Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materialise position performs unexpectedly, Northland Power 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 Northland Power will offset losses from the drop in Northland Power's long position.| Materialise vs. Chongqing Machinery Electric | Materialise vs. Dairy Farm International | Materialise vs. NORTHEAST UTILITIES | Materialise vs. Chesapeake Utilities |
| Northland Power vs. Caltagirone SpA | Northland Power vs. Materialise NV | Northland Power vs. Perma Fix Environmental Services | Northland Power vs. NEWELL RUBBERMAID |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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