Correlation Between Materialise and Santander Bank

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

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

Diversification Opportunities for Materialise and Santander Bank

0.39

Correlation Coefficient

Materialise  Santander Bank

Weak diversification

The 3 months correlation between Materialise and Santander is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and Santander Bank Polska in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santander Bank Polska 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 Santander Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santander Bank Polska has no effect on the direction of Materialise i.e., Materialise and Santander Bank go up and down completely randomly.

Pair Corralation between Materialise and Santander Bank

Assuming the 90 days trading horizon Materialise NV is expected to generate 1.87 times more return on investment than Santander Bank. However, Materialise is 1.87 times more volatile than Santander Bank Polska. It trades about 0.12 of its potential returns per unit of risk. Santander Bank Polska is currently generating about 0.23 per unit of risk. If you would invest  695.00  in Materialise NV on October 26, 2024 and sell it today you would earn a total of  50.00  from holding Materialise NV or generate 7.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Materialise NV  vs.  Santander Bank Polska

Materialise NV

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Materialise NV are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Materialise unveiled solid returns over the last few months and may actually be approaching a breakup point.

Santander Bank Polska

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Santander Bank Polska are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Santander Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Materialise and Santander Bank

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

The idea behind Materialise NV and Santander Bank Polska 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.