Correlation Between Materialise and SILICON LABORATOR

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

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

Diversification Opportunities for Materialise and SILICON LABORATOR

0.59

Correlation Coefficient

Materialise  SILICON LABORATOR

Very weak diversification

The 3 months correlation between Materialise and SILICON is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and SILICON LABORATOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SILICON LABORATOR 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 SILICON LABORATOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SILICON LABORATOR has no effect on the direction of Materialise i.e., Materialise and SILICON LABORATOR go up and down completely randomly.

Pair Corralation between Materialise and SILICON LABORATOR

Assuming the 90 days trading horizon Materialise is expected to generate 1.06 times less return on investment than SILICON LABORATOR. In addition to that, Materialise is 1.42 times more volatile than SILICON LABORATOR. It trades about 0.14 of its total potential returns per unit of risk. SILICON LABORATOR is currently generating about 0.21 per unit of volatility. If you would invest  12,200  in SILICON LABORATOR on October 25, 2024 and sell it today you would earn a total of  1,100  from holding SILICON LABORATOR or generate 9.02% return on investment over 90 days.

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

Materialise NV  vs.  SILICON LABORATOR

Materialise NV

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Materialise NV are ranked lower than 11 (%) 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.

SILICON LABORATOR

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SILICON LABORATOR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SILICON LABORATOR unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Materialise and SILICON LABORATOR

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

The idea behind Materialise NV and SILICON LABORATOR 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.