Correlation Between Altair Engineering and Universal Entertainment
Can any of the company-specific risk be diversified away by investing in both Altair Engineering and Universal Entertainment 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 Universal Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altair Engineering and Universal Entertainment, you can compare the effects of market volatilities on Altair Engineering and Universal Entertainment 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 Universal Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altair Engineering and Universal Entertainment.
Diversification Opportunities for Altair Engineering and Universal Entertainment
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Altair and Universal is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and Universal Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Entertainment 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 Universal Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Entertainment has no effect on the direction of Altair Engineering i.e., Altair Engineering and Universal Entertainment go up and down completely randomly.
Pair Corralation between Altair Engineering and Universal Entertainment
Assuming the 90 days horizon Altair Engineering is expected to generate 0.73 times more return on investment than Universal Entertainment. However, Altair Engineering is 1.37 times less risky than Universal Entertainment. It trades about 0.06 of its potential returns per unit of risk. Universal Entertainment is currently generating about -0.05 per unit of risk. If you would invest 6,250 in Altair Engineering on November 28, 2024 and sell it today you would earn a total of 4,350 from holding Altair Engineering or generate 69.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Altair Engineering vs. Universal Entertainment
Performance |
| Timeline |
| Altair Engineering |
| Universal Entertainment |
Altair Engineering and Universal Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altair Engineering and Universal Entertainment
The main advantage of trading using opposite Altair Engineering and Universal Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altair Engineering position performs unexpectedly, Universal Entertainment 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 Universal Entertainment will offset losses from the drop in Universal Entertainment's long position.| Altair Engineering vs. Take Two Interactive Software | Altair Engineering vs. Alfa Financial Software | Altair Engineering vs. Constellation Software | Altair Engineering vs. ATOSS SOFTWARE |
| Universal Entertainment vs. Altair Engineering | Universal Entertainment vs. ARISTOCRAT LEISURE | Universal Entertainment vs. LG Display Co | Universal Entertainment vs. Playtech plc |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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