Correlation Between Materialise and Sunrun

Can any of the company-specific risk be diversified away by investing in both Materialise and Sunrun 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 Sunrun into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Materialise NV and Sunrun Inc, you can compare the effects of market volatilities on Materialise and Sunrun 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 Sunrun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materialise and Sunrun.

Diversification Opportunities for Materialise and Sunrun

-0.88

Correlation Coefficient

Materialise  Sunrun

Pay attention - limited upside

The 3 months correlation between Materialise and Sunrun is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and Sunrun Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunrun Inc 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 Sunrun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunrun Inc has no effect on the direction of Materialise i.e., Materialise and Sunrun go up and down completely randomly.

Pair Corralation between Materialise and Sunrun

Assuming the 90 days trading horizon Materialise NV is expected to under-perform the Sunrun. But the stock apears to be less risky and, when comparing its historical volatility, Materialise NV is 1.05 times less risky than Sunrun. The stock trades about -0.1 of its potential returns per unit of risk. The Sunrun Inc is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,060  in Sunrun Inc on October 10, 2024 and sell it today you would lose (22.00) from holding Sunrun Inc or give up 2.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Materialise NV  vs.  Sunrun Inc

Materialise NV

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Materialise NV are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Materialise unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sunrun Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunrun Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Materialise and Sunrun

The main advantage of trading using opposite Materialise and Sunrun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materialise position performs unexpectedly, Sunrun 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 Sunrun will offset losses from the drop in Sunrun's long position.

The idea behind Materialise NV and Sunrun Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.