Correlation Between Materialise and Microchip Technology
Can any of the company-specific risk be diversified away by investing in both Materialise and Microchip Technology 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 Microchip Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Materialise NV and Microchip Technology Incorporated, you can compare the effects of market volatilities on Materialise and Microchip Technology 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 Microchip Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materialise and Microchip Technology.
Diversification Opportunities for Materialise and Microchip Technology
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Materialise and Microchip is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and Microchip Technology Incorpora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microchip Technology 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 Microchip Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microchip Technology has no effect on the direction of Materialise i.e., Materialise and Microchip Technology go up and down completely randomly.
Pair Corralation between Materialise and Microchip Technology
Assuming the 90 days trading horizon Materialise NV is expected to generate 1.35 times more return on investment than Microchip Technology. However, Materialise is 1.35 times more volatile than Microchip Technology Incorporated. It trades about -0.01 of its potential returns per unit of risk. Microchip Technology Incorporated is currently generating about -0.02 per unit of risk. If you would invest 968.00 in Materialise NV on September 29, 2024 and sell it today you would lose (273.00) from holding Materialise NV or give up 28.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Materialise NV vs. Microchip Technology Incorpora
Performance |
| Timeline |
| Materialise NV |
| Microchip Technology |
Materialise and Microchip Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Materialise and Microchip Technology
The main advantage of trading using opposite Materialise and Microchip Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materialise position performs unexpectedly, Microchip Technology 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 Microchip Technology will offset losses from the drop in Microchip Technology's long position.| Materialise vs. Apple Inc | Materialise vs. Apple Inc | Materialise vs. Apple Inc | Materialise vs. Apple Inc |
| Microchip Technology vs. Hyster Yale Materials Handling | Microchip Technology vs. Materialise NV | Microchip Technology vs. Compagnie Plastic Omnium | Microchip Technology vs. COFCO Joycome Foods |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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