Correlation Between Altair Engineering and Cloudflare
Can any of the company-specific risk be diversified away by investing in both Altair Engineering and Cloudflare 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 Cloudflare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altair Engineering and Cloudflare, you can compare the effects of market volatilities on Altair Engineering and Cloudflare 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 Cloudflare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altair Engineering and Cloudflare.
Diversification Opportunities for Altair Engineering and Cloudflare
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Altair and Cloudflare is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and Cloudflare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloudflare 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 Cloudflare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloudflare has no effect on the direction of Altair Engineering i.e., Altair Engineering and Cloudflare go up and down completely randomly.
Pair Corralation between Altair Engineering and Cloudflare
Given the investment horizon of 90 days Altair Engineering is expected to generate 100.73 times less return on investment than Cloudflare. But when comparing it to its historical volatility, Altair Engineering is 36.4 times less risky than Cloudflare. It trades about 0.15 of its potential returns per unit of risk. Cloudflare is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 11,716 in Cloudflare on November 18, 2024 and sell it today you would earn a total of 5,400 from holding Cloudflare or generate 46.09% 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. Cloudflare
Performance |
| Timeline |
| Altair Engineering |
| Cloudflare |
Altair Engineering and Cloudflare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altair Engineering and Cloudflare
The main advantage of trading using opposite Altair Engineering and Cloudflare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altair Engineering position performs unexpectedly, Cloudflare 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 Cloudflare will offset losses from the drop in Cloudflare's long position.| Altair Engineering vs. Global Blue Group | Altair Engineering vs. EverCommerce | Altair Engineering vs. CSG Systems International | Altair Engineering vs. Consensus Cloud Solutions |
| Cloudflare vs. Palo Alto Networks | Cloudflare vs. Zscaler | Cloudflare vs. Okta Inc | Cloudflare vs. Adobe Systems Incorporated |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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