Correlation Between MidCap Financial and Altair Engineering
Can any of the company-specific risk be diversified away by investing in both MidCap Financial 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 MidCap Financial and Altair Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MidCap Financial Investment and Altair Engineering, you can compare the effects of market volatilities on MidCap Financial 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 MidCap Financial with a short position of Altair Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidCap Financial and Altair Engineering.
Diversification Opportunities for MidCap Financial and Altair Engineering
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MidCap and Altair is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment and Altair Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering and MidCap Financial 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 MidCap Financial Investment 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 MidCap Financial i.e., MidCap Financial and Altair Engineering go up and down completely randomly.
Pair Corralation between MidCap Financial and Altair Engineering
Assuming the 90 days trading horizon MidCap Financial Investment is expected to generate 1.21 times more return on investment than Altair Engineering. However, MidCap Financial is 1.21 times more volatile than Altair Engineering. It trades about 0.14 of its potential returns per unit of risk. Altair Engineering is currently generating about 0.11 per unit of risk. If you would invest 1,192 in MidCap Financial Investment on October 29, 2024 and sell it today you would earn a total of 114.00 from holding MidCap Financial Investment or generate 9.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MidCap Financial Investment vs. Altair Engineering
Performance |
| Timeline |
| MidCap Financial Inv |
| Altair Engineering |
MidCap Financial and Altair Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MidCap Financial and Altair Engineering
The main advantage of trading using opposite MidCap Financial and Altair Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MidCap Financial 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.| MidCap Financial vs. Tianjin Capital Environmental | MidCap Financial vs. SLR Investment Corp | MidCap Financial vs. Chuangs China Investments | MidCap Financial vs. CHAMPION IRON |
| Altair Engineering vs. PENN NATL GAMING | Altair Engineering vs. Games Workshop Group | Altair Engineering vs. FRACTAL GAMING GROUP | Altair Engineering vs. GameStop Corp |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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