Correlation Between Materialise and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both Materialise and Burlington Stores 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 Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Materialise NV and Burlington Stores, you can compare the effects of market volatilities on Materialise and Burlington Stores 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 Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materialise and Burlington Stores.
Diversification Opportunities for Materialise and Burlington Stores
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Materialise and Burlington is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores 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 Burlington Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burlington Stores has no effect on the direction of Materialise i.e., Materialise and Burlington Stores go up and down completely randomly.
Pair Corralation between Materialise and Burlington Stores
Assuming the 90 days trading horizon Materialise NV is expected to generate 2.5 times more return on investment than Burlington Stores. However, Materialise is 2.5 times more volatile than Burlington Stores. It trades about 0.14 of its potential returns per unit of risk. Burlington Stores is currently generating about -0.05 per unit of risk. If you would invest 695.00 in Materialise NV on October 25, 2024 and sell it today you would earn a total of 55.00 from holding Materialise NV or generate 7.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.44% |
| Values | Daily Returns |
Materialise NV vs. Burlington Stores
Performance |
| Timeline |
| Materialise NV |
| Burlington Stores |
Materialise and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Materialise and Burlington Stores
The main advantage of trading using opposite Materialise and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materialise position performs unexpectedly, Burlington Stores 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 Burlington Stores will offset losses from the drop in Burlington Stores' long position.| Materialise vs. Xiwang Special Steel | Materialise vs. Olympic Steel | Materialise vs. Zoom Video Communications | Materialise vs. FIH MOBILE |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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