Correlation Between Cypress Development and Materion

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

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

Diversification Opportunities for Cypress Development and Materion

-0.17

Correlation Coefficient

Cypress Development  Materion

Good diversification

The 3 months correlation between Cypress and Materion is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Cypress Development Corp and Materion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materion and Cypress Development 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 Cypress Development Corp are associated (or correlated) with Materion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materion has no effect on the direction of Cypress Development i.e., Cypress Development and Materion go up and down completely randomly.

Pair Corralation between Cypress Development and Materion

Assuming the 90 days horizon Cypress Development Corp is expected to generate 2.48 times more return on investment than Materion. However, Cypress Development is 2.48 times more volatile than Materion. It trades about 0.05 of its potential returns per unit of risk. Materion is currently generating about 0.06 per unit of risk. If you would invest  21.00  in Cypress Development Corp on September 5, 2024 and sell it today you would earn a total of  2.00  from holding Cypress Development Corp or generate 9.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Cypress Development Corp  vs.  Materion

Cypress Development Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cypress Development Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cypress Development reported solid returns over the last few months and may actually be approaching a breakup point.

Materion

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Materion are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Materion may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cypress Development and Materion

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

The idea behind Cypress Development Corp and Materion 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.