Correlation Between Heidelberg Materials and NetApp

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

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

Diversification Opportunities for Heidelberg Materials and NetApp

0.73

Correlation Coefficient

Heidelberg Materials  NetApp

Poor diversification

The 3 months correlation between Heidelberg and NetApp is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and NetApp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetApp Inc and Heidelberg Materials 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 Heidelberg Materials AG are associated (or correlated) with NetApp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetApp Inc has no effect on the direction of Heidelberg Materials i.e., Heidelberg Materials and NetApp go up and down completely randomly.

Pair Corralation between Heidelberg Materials and NetApp

Assuming the 90 days horizon Heidelberg Materials is expected to generate 1.38 times less return on investment than NetApp. But when comparing it to its historical volatility, Heidelberg Materials AG is 1.1 times less risky than NetApp. It trades about 0.14 of its potential returns per unit of risk. NetApp Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  7,320  in NetApp Inc on April 24, 2025 and sell it today you would earn a total of  1,865  from holding NetApp Inc or generate 25.48% return on investment over 90 days.

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

Heidelberg Materials AG  vs.  NetApp Inc

Heidelberg Materials

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heidelberg Materials AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Heidelberg Materials reported solid returns over the last few months and may actually be approaching a breakup point.

NetApp Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NetApp Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NetApp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heidelberg Materials and NetApp

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

The idea behind Heidelberg Materials AG and NetApp Inc 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..