Correlation Between Materialise and COLUMBIA SPORTSWEAR

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

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

Diversification Opportunities for Materialise and COLUMBIA SPORTSWEAR

0.32

Correlation Coefficient

Materialise  COLUMBIA SPORTSWEAR

Weak diversification

The 3 months correlation between Materialise and COLUMBIA is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and COLUMBIA SPORTSWEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COLUMBIA SPORTSWEAR has no effect on the direction of Materialise i.e., Materialise and COLUMBIA SPORTSWEAR go up and down completely randomly.

Pair Corralation between Materialise and COLUMBIA SPORTSWEAR

Assuming the 90 days trading horizon Materialise NV is expected to under-perform the COLUMBIA SPORTSWEAR. In addition to that, Materialise is 2.62 times more volatile than COLUMBIA SPORTSWEAR. It trades about -0.08 of its total potential returns per unit of risk. COLUMBIA SPORTSWEAR is currently generating about -0.11 per unit of volatility. If you would invest  8,270  in COLUMBIA SPORTSWEAR on December 25, 2024 and sell it today you would lose (1,170) from holding COLUMBIA SPORTSWEAR or give up 14.15% of portfolio value over 90 days.

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

Materialise NV  vs.  COLUMBIA SPORTSWEAR

Materialise NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Materialise NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

COLUMBIA SPORTSWEAR

Risk-Adjusted Performance

Very Weak

Over the last 90 days COLUMBIA SPORTSWEAR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Materialise and COLUMBIA SPORTSWEAR

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

The idea behind Materialise NV and COLUMBIA SPORTSWEAR 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.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.