Correlation Between Safety Insurance and Materialise
Can any of the company-specific risk be diversified away by investing in both Safety Insurance 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 Safety Insurance and Materialise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safety Insurance Group and Materialise NV, you can compare the effects of market volatilities on Safety Insurance 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 Safety Insurance with a short position of Materialise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safety Insurance and Materialise.
Diversification Opportunities for Safety Insurance and Materialise
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Safety and Materialise is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Safety Insurance Group and Materialise NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materialise NV and Safety Insurance 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 Safety Insurance Group 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 Safety Insurance i.e., Safety Insurance and Materialise go up and down completely randomly.
Pair Corralation between Safety Insurance and Materialise
Assuming the 90 days horizon Safety Insurance is expected to generate 1.58 times less return on investment than Materialise. But when comparing it to its historical volatility, Safety Insurance Group is 1.91 times less risky than Materialise. It trades about 0.01 of its potential returns per unit of risk. Materialise NV is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 802.00 in Materialise NV on September 16, 2024 and sell it today you would lose (57.00) from holding Materialise NV or give up 7.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Safety Insurance Group vs. Materialise NV
Performance |
| Timeline |
| Safety Insurance |
| Materialise NV |
Safety Insurance and Materialise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safety Insurance and Materialise
The main advantage of trading using opposite Safety Insurance and Materialise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Insurance 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.| Safety Insurance vs. Insurance Australia Group | Safety Insurance vs. Superior Plus Corp | Safety Insurance vs. SIVERS SEMICONDUCTORS AB | Safety Insurance vs. CHINA HUARONG ENERHD 50 |
| Materialise vs. Cal Maine Foods | Materialise vs. Insurance Australia Group | Materialise vs. REVO INSURANCE SPA | Materialise vs. Safety Insurance Group |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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