Correlation Between Nasdaq and Materialise

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

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

Diversification Opportunities for Nasdaq and Materialise

0.93

Correlation Coefficient

Nasdaq  Materialise

Almost no diversification

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

Pair Corralation between Nasdaq and Materialise

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.45 times more return on investment than Materialise. However, Nasdaq Inc is 2.22 times less risky than Materialise. It trades about 0.04 of its potential returns per unit of risk. Materialise NV is currently generating about 0.01 per unit of risk. If you would invest  5,991  in Nasdaq Inc on September 21, 2024 and sell it today you would earn a total of  1,747  from holding Nasdaq Inc or generate 29.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.8%
Values	Daily Returns

Nasdaq Inc  vs.  Materialise NV

Nasdaq Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

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

Pair Trading with Nasdaq and Materialise

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

The idea behind Nasdaq Inc and Materialise NV 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.