Correlation Between Altair Engineering and Medtronic PLC
Can any of the company-specific risk be diversified away by investing in both Altair Engineering and Medtronic PLC 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 Medtronic PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altair Engineering and Medtronic PLC, you can compare the effects of market volatilities on Altair Engineering and Medtronic PLC 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 Medtronic PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altair Engineering and Medtronic PLC.
Diversification Opportunities for Altair Engineering and Medtronic PLC
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Altair and Medtronic is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and Medtronic PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medtronic PLC 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 Medtronic PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medtronic PLC has no effect on the direction of Altair Engineering i.e., Altair Engineering and Medtronic PLC go up and down completely randomly.
Pair Corralation between Altair Engineering and Medtronic PLC
Assuming the 90 days horizon Altair Engineering is expected to generate 0.58 times more return on investment than Medtronic PLC. However, Altair Engineering is 1.72 times less risky than Medtronic PLC. It trades about 0.17 of its potential returns per unit of risk. Medtronic PLC is currently generating about -0.19 per unit of risk. If you would invest 9,750 in Altair Engineering on September 13, 2024 and sell it today you would earn a total of 250.00 from holding Altair Engineering or generate 2.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Altair Engineering vs. Medtronic PLC
Performance |
| Timeline |
| Altair Engineering |
| Medtronic PLC |
Altair Engineering and Medtronic PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altair Engineering and Medtronic PLC
The main advantage of trading using opposite Altair Engineering and Medtronic PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altair Engineering position performs unexpectedly, Medtronic PLC 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 Medtronic PLC will offset losses from the drop in Medtronic PLC's long position.| Altair Engineering vs. Adyen NV | Altair Engineering vs. Superior Plus Corp | Altair Engineering vs. SIVERS SEMICONDUCTORS AB | Altair Engineering vs. Norsk Hydro ASA |
| Medtronic PLC vs. GUARDANT HEALTH CL | Medtronic PLC vs. EPSILON HEALTHCARE LTD | Medtronic PLC vs. MEDICAL FACILITIES NEW | Medtronic PLC vs. DiamondRock Hospitality |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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