Correlation Between Altair Engineering and PENN NATL
Can any of the company-specific risk be diversified away by investing in both Altair Engineering and PENN NATL 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 Altair Engineering and PENN NATL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altair Engineering and PENN NATL GAMING, you can compare the effects of market volatilities on Altair Engineering and PENN NATL 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 Altair Engineering with a short position of PENN NATL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altair Engineering and PENN NATL.
Diversification Opportunities for Altair Engineering and PENN NATL
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Altair and PENN is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and PENN NATL GAMING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN NATL GAMING and Altair Engineering 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 Altair Engineering are associated (or correlated) with PENN NATL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENN NATL GAMING has no effect on the direction of Altair Engineering i.e., Altair Engineering and PENN NATL go up and down completely randomly.
Pair Corralation between Altair Engineering and PENN NATL
Assuming the 90 days horizon Altair Engineering is expected to generate 0.2 times more return on investment than PENN NATL. However, Altair Engineering is 5.1 times less risky than PENN NATL. It trades about 0.31 of its potential returns per unit of risk. PENN NATL GAMING is currently generating about -0.13 per unit of risk. If you would invest 10,000 in Altair Engineering on September 26, 2024 and sell it today you would earn a total of 400.00 from holding Altair Engineering or generate 4.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Altair Engineering vs. PENN NATL GAMING
Performance |
Timeline |
Altair Engineering |
PENN NATL GAMING |
Altair Engineering and PENN NATL Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Altair Engineering and PENN NATL
The main advantage of trading using opposite Altair Engineering and PENN NATL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altair Engineering position performs unexpectedly, PENN NATL 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 PENN NATL will offset losses from the drop in PENN NATL's long position.Altair Engineering vs. Adobe Inc | Altair Engineering vs. ADYEN NV UNSPADR001 | Altair Engineering vs. Square Inc | Altair Engineering vs. CrowdStrike Holdings |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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