Correlation Between Materialise and Gildan Activewear
Can any of the company-specific risk be diversified away by investing in both Materialise and Gildan Activewear 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 Gildan Activewear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Materialise NV and Gildan Activewear, you can compare the effects of market volatilities on Materialise and Gildan Activewear 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 Gildan Activewear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materialise and Gildan Activewear.
Diversification Opportunities for Materialise and Gildan Activewear
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Materialise and Gildan is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and Gildan Activewear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gildan Activewear 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 Gildan Activewear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gildan Activewear has no effect on the direction of Materialise i.e., Materialise and Gildan Activewear go up and down completely randomly.
Pair Corralation between Materialise and Gildan Activewear
Assuming the 90 days trading horizon Materialise NV is expected to generate 3.27 times more return on investment than Gildan Activewear. However, Materialise is 3.27 times more volatile than Gildan Activewear. It trades about 0.28 of its potential returns per unit of risk. Gildan Activewear is currently generating about 0.17 per unit of risk. If you would invest 555.00 in Materialise NV on September 3, 2024 and sell it today you would earn a total of 130.00 from holding Materialise NV or generate 23.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Materialise NV vs. Gildan Activewear
Performance |
| Timeline |
| Materialise NV |
| Gildan Activewear |
Materialise and Gildan Activewear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Materialise and Gildan Activewear
The main advantage of trading using opposite Materialise and Gildan Activewear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materialise position performs unexpectedly, Gildan Activewear 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 Gildan Activewear will offset losses from the drop in Gildan Activewear's long position.| Materialise vs. Ming Le Sports | Materialise vs. Insurance Australia Group | Materialise vs. Direct Line Insurance | Materialise vs. Perseus Mining Limited |
| Gildan Activewear vs. GFL ENVIRONM | Gildan Activewear vs. American Airlines Group | Gildan Activewear vs. Nippon Steel | Gildan Activewear vs. Aegean Airlines SA |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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