Correlation Between Materialise and Virtus Investment

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

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

Diversification Opportunities for Materialise and Virtus Investment

0.93

Correlation Coefficient

Materialise  Virtus Investment

Almost no diversification

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

Pair Corralation between Materialise and Virtus Investment

Assuming the 90 days trading horizon Materialise NV is expected to generate 1.7 times more return on investment than Virtus Investment. However, Materialise is 1.7 times more volatile than Virtus Investment Partners. It trades about 0.17 of its potential returns per unit of risk. Virtus Investment Partners is currently generating about 0.16 per unit of risk. If you would invest  476.00  in Materialise NV on September 1, 2024 and sell it today you would earn a total of  209.00  from holding Materialise NV or generate 43.91% 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.  Virtus Investment Partners

Materialise NV

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Materialise NV are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Materialise unveiled solid returns over the last few months and may actually be approaching a breakup point.

Virtus Investment

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Investment Partners are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Virtus Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Materialise and Virtus Investment

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

The idea behind Materialise NV and Virtus Investment Partners 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.