Correlation Between Workiva and Materialise

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

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

Diversification Opportunities for Workiva and Materialise

0.95

Correlation Coefficient

Workiva  Materialise

Almost no diversification

The 3 months correlation between Workiva and Materialise is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Workiva and Materialise NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materialise NV and Workiva 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 Workiva 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 Workiva i.e., Workiva and Materialise go up and down completely randomly.

Pair Corralation between Workiva and Materialise

Allowing for the 90-day total investment horizon Workiva is expected to generate 1.52 times less return on investment than Materialise. But when comparing it to its historical volatility, Workiva is 2.23 times less risky than Materialise. It trades about 0.28 of its potential returns per unit of risk. Materialise NV is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  513.00  in Materialise NV on September 18, 2024 and sell it today you would earn a total of  283.00  from holding Materialise NV or generate 55.17% return on investment over 90 days.

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

Workiva  vs.  Materialise NV

Workiva

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Workiva are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal forward-looking signals, Workiva disclosed solid returns over the last few months and may actually be approaching a breakup point.

Materialise NV

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Materialise NV are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Materialise unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Workiva and Materialise

The main advantage of trading using opposite Workiva and Materialise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workiva 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 Workiva 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.