Correlation Between Materialise and NRG Energy

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

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

Diversification Opportunities for Materialise and NRG Energy

0.72

Correlation Coefficient

Materialise  NRG Energy

Poor diversification

The 3 months correlation between Materialise and NRG is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and NRG Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRG Energy 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 NRG Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRG Energy has no effect on the direction of Materialise i.e., Materialise and NRG Energy go up and down completely randomly.

Pair Corralation between Materialise and NRG Energy

If you would invest  690.00  in Materialise NV on October 23, 2024 and sell it today you would earn a total of  55.00  from holding Materialise NV or generate 7.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	0.0%
Values	Daily Returns

Materialise NV  vs.  NRG Energy

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 weak basic indicators, Materialise unveiled solid returns over the last few months and may actually be approaching a breakup point.

NRG Energy

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days NRG Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, NRG Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Materialise and NRG Energy

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

The idea behind Materialise NV and NRG Energy 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.