Correlation Between WILLIS LEASE and Altair Engineering

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

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

Diversification Opportunities for WILLIS LEASE and Altair Engineering

0.84

Correlation Coefficient

WILLIS LEASE  Altair Engineering

Very poor diversification

The 3 months correlation between WILLIS and Altair is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding WILLIS LEASE FIN and Altair Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering and WILLIS LEASE 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 WILLIS LEASE FIN are associated (or correlated) with Altair Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altair Engineering has no effect on the direction of WILLIS LEASE i.e., WILLIS LEASE and Altair Engineering go up and down completely randomly.

Pair Corralation between WILLIS LEASE and Altair Engineering

Assuming the 90 days horizon WILLIS LEASE is expected to generate 3.06 times less return on investment than Altair Engineering. In addition to that, WILLIS LEASE is 6.63 times more volatile than Altair Engineering. It trades about 0.02 of its total potential returns per unit of risk. Altair Engineering is currently generating about 0.37 per unit of volatility. If you would invest  9,950  in Altair Engineering on September 27, 2024 and sell it today you would earn a total of  450.00  from holding Altair Engineering or generate 4.52% return on investment over 90 days.

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

WILLIS LEASE FIN  vs.  Altair Engineering

WILLIS LEASE FIN

Risk-Adjusted Performance

13 of 100

Good

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

Altair Engineering

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altair Engineering are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Altair Engineering reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WILLIS LEASE and Altair Engineering

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

The idea behind WILLIS LEASE FIN and Altair Engineering 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.