Correlation Between Materialise and Deutsche Wohnen

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

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

Diversification Opportunities for Materialise and Deutsche Wohnen

0.64

Correlation Coefficient

Materialise  Deutsche Wohnen

Poor diversification

The 3 months correlation between Materialise and Deutsche is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and Deutsche Wohnen SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Wohnen SE 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 Deutsche Wohnen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Wohnen SE has no effect on the direction of Materialise i.e., Materialise and Deutsche Wohnen go up and down completely randomly.

Pair Corralation between Materialise and Deutsche Wohnen

Assuming the 90 days trading horizon Materialise NV is expected to under-perform the Deutsche Wohnen. In addition to that, Materialise is 3.73 times more volatile than Deutsche Wohnen SE. It trades about -0.08 of its total potential returns per unit of risk. Deutsche Wohnen SE is currently generating about -0.13 per unit of volatility. If you would invest  2,335  in Deutsche Wohnen SE on December 24, 2024 and sell it today you would lose (265.00) from holding Deutsche Wohnen SE or give up 11.35% of portfolio value over 90 days.

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

Materialise NV  vs.  Deutsche Wohnen SE

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 uncertain 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.

Deutsche Wohnen SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days Deutsche Wohnen SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Materialise and Deutsche Wohnen

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

The idea behind Materialise NV and Deutsche Wohnen SE 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.