Correlation Between Grand Canyon and Materialise
Can any of the company-specific risk be diversified away by investing in both Grand Canyon 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 Grand Canyon and Materialise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grand Canyon Education and Materialise NV, you can compare the effects of market volatilities on Grand Canyon 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 Grand Canyon with a short position of Materialise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Canyon and Materialise.
Diversification Opportunities for Grand Canyon and Materialise
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Grand and Materialise is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Grand Canyon Education and Materialise NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materialise NV and Grand Canyon 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 Grand Canyon Education 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 Grand Canyon i.e., Grand Canyon and Materialise go up and down completely randomly.
Pair Corralation between Grand Canyon and Materialise
Assuming the 90 days trading horizon Grand Canyon Education is expected to generate 0.94 times more return on investment than Materialise. However, Grand Canyon Education is 1.06 times less risky than Materialise. It trades about 0.29 of its potential returns per unit of risk. Materialise NV is currently generating about 0.21 per unit of risk. If you would invest 12,200 in Grand Canyon Education on August 30, 2024 and sell it today you would earn a total of 3,200 from holding Grand Canyon Education or generate 26.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grand Canyon Education vs. Materialise NV
Performance |
| Timeline |
| Grand Canyon Education |
| Materialise NV |
Grand Canyon and Materialise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Canyon and Materialise
The main advantage of trading using opposite Grand Canyon and Materialise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Canyon 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.| Grand Canyon vs. Apple Inc | Grand Canyon vs. Apple Inc | Grand Canyon vs. Apple Inc | Grand Canyon vs. Apple Inc |
| Materialise vs. Elmos Semiconductor SE | Materialise vs. Lendlease Group | Materialise vs. Magnachip Semiconductor | Materialise vs. Air Lease |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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