Correlation Between Materialise and Commerzbank

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

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

Diversification Opportunities for Materialise and Commerzbank

-0.77

Correlation Coefficient

Materialise  Commerzbank

Pay attention - limited upside

The 3 months correlation between Materialise and Commerzbank is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and Commerzbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerzbank AG 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 Commerzbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerzbank AG has no effect on the direction of Materialise i.e., Materialise and Commerzbank go up and down completely randomly.

Pair Corralation between Materialise and Commerzbank

Assuming the 90 days trading horizon Materialise NV is expected to generate 3.17 times more return on investment than Commerzbank. However, Materialise is 3.17 times more volatile than Commerzbank AG. It trades about 0.15 of its potential returns per unit of risk. Commerzbank AG is currently generating about -0.07 per unit of risk. If you would invest  486.00  in Materialise NV on September 29, 2024 and sell it today you would earn a total of  209.00  from holding Materialise NV or generate 43.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Materialise NV  vs.  Commerzbank AG

Materialise NV

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Materialise NV are ranked lower than 12 (%) 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.

Commerzbank AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Commerzbank AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, Commerzbank 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 Commerzbank

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

The idea behind Materialise NV and Commerzbank AG 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.