Correlation Between Dow Jones and Materialise
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Materialise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Materialise NV, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Materialise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Materialise.
Diversification Opportunities for Dow Jones and Materialise
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Materialise is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Materialise NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materialise NV and Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and Materialise go up and down completely randomly.
Pair Corralation between Dow Jones and Materialise
Assuming the 90 days trading horizon Dow Jones is expected to generate 3.19 times less return on investment than Materialise. But when comparing it to its historical volatility, Dow Jones Industrial is 4.18 times less risky than Materialise. It trades about 0.25 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 590.00 in Materialise NV on August 29, 2024 and sell it today you would earn a total of 100.00 from holding Materialise NV or generate 16.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Materialise NV
Performance |
| Timeline |
Dow Jones and Materialise Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Materialise NV
Pair trading matchups for Materialise
Pair Trading with Dow Jones and Materialise
The main advantage of trading using opposite Dow Jones and Materialise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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