Correlation Between Materialise and BJs Restaurants

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

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

Diversification Opportunities for Materialise and BJs Restaurants

0.52

Correlation Coefficient

Materialise  BJs Restaurants

Very weak diversification

The 3 months correlation between Materialise and BJs is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants 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 BJs Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Restaurants has no effect on the direction of Materialise i.e., Materialise and BJs Restaurants go up and down completely randomly.

Pair Corralation between Materialise and BJs Restaurants

Assuming the 90 days trading horizon Materialise NV is expected to generate 1.61 times more return on investment than BJs Restaurants. However, Materialise is 1.61 times more volatile than BJs Restaurants. It trades about 0.15 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.02 per unit of risk. If you would invest  545.00  in Materialise NV on October 25, 2024 and sell it today you would earn a total of  205.00  from holding Materialise NV or generate 37.61% 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.  BJs Restaurants

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.

BJs Restaurants

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BJs Restaurants is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Materialise and BJs Restaurants

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

The idea behind Materialise NV and BJs Restaurants 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.