Correlation Between New Residential and Materialise
Can any of the company-specific risk be diversified away by investing in both New Residential and Materialise 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 New Residential and Materialise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Residential Investment and Materialise NV, you can compare the effects of market volatilities on New Residential and Materialise 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 New Residential with a short position of Materialise. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Materialise.
Diversification Opportunities for New Residential and Materialise
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and Materialise is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Materialise NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materialise NV and New Residential 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 New Residential Investment are associated (or correlated) with Materialise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materialise NV has no effect on the direction of New Residential i.e., New Residential and Materialise go up and down completely randomly.
Pair Corralation between New Residential and Materialise
Assuming the 90 days trading horizon New Residential is expected to generate 3.75 times less return on investment than Materialise. But when comparing it to its historical volatility, New Residential Investment is 4.52 times less risky than Materialise. It trades about 0.23 of its potential returns per unit of risk. Materialise NV is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 650.00 in Materialise NV on September 13, 2024 and sell it today you would earn a total of 110.00 from holding Materialise NV or generate 16.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. Materialise NV
Performance |
| Timeline |
| New Residential Inve |
| Materialise NV |
New Residential and Materialise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Materialise
The main advantage of trading using opposite New Residential and Materialise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, Materialise 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 Materialise will offset losses from the drop in Materialise's long position.| New Residential vs. PLAYTIKA HOLDING DL 01 | New Residential vs. Nine Dragons Paper | New Residential vs. Sunstone Hotel Investors | New Residential vs. Onxeo SA |
| Materialise vs. Apple Inc | Materialise vs. Apple Inc | Materialise vs. Apple Inc | Materialise vs. Apple Inc |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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