Correlation Between Werner Enterprises and Materialise

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

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

Diversification Opportunities for Werner Enterprises and Materialise

0.74

Correlation Coefficient

Werner Enterprises  Materialise

Poor diversification

The 3 months correlation between Werner and Materialise is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Werner Enterprises and Materialise NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materialise NV and Werner Enterprises 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 Werner Enterprises 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 Werner Enterprises i.e., Werner Enterprises and Materialise go up and down completely randomly.

Pair Corralation between Werner Enterprises and Materialise

Assuming the 90 days horizon Werner Enterprises is expected to generate 15.05 times less return on investment than Materialise. But when comparing it to its historical volatility, Werner Enterprises is 2.38 times less risky than Materialise. It trades about 0.03 of its potential returns per unit of risk. Materialise NV is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  452.00  in Materialise NV on October 9, 2024 and sell it today you would earn a total of  303.00  from holding Materialise NV or generate 67.04% return on investment over 90 days.

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

Werner Enterprises  vs.  Materialise NV

Werner Enterprises

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Werner Enterprises are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Werner Enterprises is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Materialise NV

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Materialise NV are ranked lower than 16 (%) 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.

Pair Trading with Werner Enterprises and Materialise

The main advantage of trading using opposite Werner Enterprises and Materialise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Werner Enterprises 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 Werner Enterprises 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.