Correlation Between Materialise and Burlington Stores

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

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

Diversification Opportunities for Materialise and Burlington Stores

0.66

Correlation Coefficient

Materialise  Burlington Stores

Poor diversification

The 3 months correlation between Materialise and Burlington is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores 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 Burlington Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burlington Stores has no effect on the direction of Materialise i.e., Materialise and Burlington Stores go up and down completely randomly.

Pair Corralation between Materialise and Burlington Stores

Assuming the 90 days trading horizon Materialise NV is expected to under-perform the Burlington Stores. In addition to that, Materialise is 2.01 times more volatile than Burlington Stores. It trades about -0.04 of its total potential returns per unit of risk. Burlington Stores is currently generating about 0.05 per unit of volatility. If you would invest  27,200  in Burlington Stores on October 10, 2024 and sell it today you would earn a total of  400.00  from holding Burlington Stores or generate 1.47% return on investment over 90 days.

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

Materialise NV  vs.  Burlington Stores

Materialise NV

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Materialise NV are ranked lower than 16 (%) 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.

Burlington Stores

Risk-Adjusted Performance

15 of 100

Good

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

Pair Trading with Materialise and Burlington Stores

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

The idea behind Materialise NV and Burlington Stores 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.