3D Printing Stocks May Be Less Correlated Than You Think

Earnings season can be a minefield for investors who own volatile stocks. Certain stocks regularly trade up or down 10–20 percent in a day when reporting earnings or other major news.

3D printing stock 3D Systems Corporation DDD, for example, opened Wednesday’s trading session up more than 15 percent following a big earnings beat. Wednesday’s move follows post-earnings moves of -6.4 percent, +25.1 percent, +10.0 percent and +16.2 percent in the past four quarters.

3D printer stocks can be so volatile that they often trade up or down off of each other’s news. Stratasys, Ltd. SSYS, for example, is up 5.3 percent on Wednesday, even though it doesn’t report earnings until Thursday.

Related Link: CLSA Anticipates Beat-And-Raise From Tyson On 'Robust' Chicken Margins

For 3D printer investors hoping to avoid the huge one-day swings associated with earnings season, Benzinga took a look at exactly how high the correlation is among 3D printer stocks 3D Systems, Stratasys, ExOne Co XONE, Voxeljet AG (ADR) VJET and Materialise NV (ADR) MTLS.

Here’s a look at Portfolio Visualizer daily return correlation matrix.

It’s not surprising that all the major 3D printer stocks are positively correlated with each other, but some of the correlations are higher than others.

As Wednesday’s trading action suggests, the highest correlation among the group is the 0.68 correlation between 3D Systems and Stratasys. The correlation certainly isn’t perfect, but it’s extremely high.

However, Materialise has a less than 0.3 correlation with all other names in the group, meaning that it is least likely to react in tandem with the other companies’ news.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Disclosure: The author holds no position in the stocks mentioned.