Correlation Between SPARTAN STORES and Materialise

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

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

Diversification Opportunities for SPARTAN STORES and Materialise

-0.26

Correlation Coefficient

SPARTAN STORES  Materialise

Very good diversification

The 3 months correlation between SPARTAN and Materialise is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding SPARTAN STORES and Materialise NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materialise NV and SPARTAN STORES 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 SPARTAN STORES 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 SPARTAN STORES i.e., SPARTAN STORES and Materialise go up and down completely randomly.

Pair Corralation between SPARTAN STORES and Materialise

Assuming the 90 days trading horizon SPARTAN STORES is expected to generate 0.38 times more return on investment than Materialise. However, SPARTAN STORES is 2.6 times less risky than Materialise. It trades about 0.04 of its potential returns per unit of risk. Materialise NV is currently generating about -0.08 per unit of risk. If you would invest  1,741  in SPARTAN STORES on December 26, 2024 and sell it today you would earn a total of  59.00  from holding SPARTAN STORES or generate 3.39% return on investment over 90 days.

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

SPARTAN STORES  vs.  Materialise NV

SPARTAN STORES

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPARTAN STORES are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward-looking indicators, SPARTAN STORES is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Materialise NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Materialise NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with SPARTAN STORES and Materialise

The main advantage of trading using opposite SPARTAN STORES and Materialise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPARTAN STORES 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 SPARTAN STORES 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.