Correlation Between Materialise and GLOBUS MEDICAL-A

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

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

Diversification Opportunities for Materialise and GLOBUS MEDICAL-A

0.93

Correlation Coefficient

Materialise  GLOBUS MEDICAL-A

Almost no diversification

The 3 months correlation between Materialise and GLOBUS is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and GLOBUS MEDICAL A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GLOBUS MEDICAL A 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 GLOBUS MEDICAL-A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GLOBUS MEDICAL A has no effect on the direction of Materialise i.e., Materialise and GLOBUS MEDICAL-A go up and down completely randomly.

Pair Corralation between Materialise and GLOBUS MEDICAL-A

Assuming the 90 days trading horizon Materialise is expected to generate 9.77 times less return on investment than GLOBUS MEDICAL-A. In addition to that, Materialise is 1.56 times more volatile than GLOBUS MEDICAL A. It trades about 0.0 of its total potential returns per unit of risk. GLOBUS MEDICAL A is currently generating about 0.03 per unit of volatility. If you would invest  6,650  in GLOBUS MEDICAL A on October 11, 2024 and sell it today you would earn a total of  1,400  from holding GLOBUS MEDICAL A or generate 21.05% return on investment over 90 days.

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

Materialise NV  vs.  GLOBUS MEDICAL A

Materialise NV

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Materialise NV are ranked lower than 14 (%) 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.

GLOBUS MEDICAL A

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GLOBUS MEDICAL A are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, GLOBUS MEDICAL-A exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Materialise and GLOBUS MEDICAL-A

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

The idea behind Materialise NV and GLOBUS MEDICAL A 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.