Correlation Between BURLINGTON STORES and Altair Engineering
Can any of the company-specific risk be diversified away by investing in both BURLINGTON STORES 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 BURLINGTON STORES and Altair Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BURLINGTON STORES and Altair Engineering, you can compare the effects of market volatilities on BURLINGTON STORES 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 BURLINGTON STORES with a short position of Altair Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of BURLINGTON STORES and Altair Engineering.
Diversification Opportunities for BURLINGTON STORES and Altair Engineering
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BURLINGTON and Altair is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding BURLINGTON STORES and Altair Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering and BURLINGTON STORES 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 BURLINGTON STORES 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 BURLINGTON STORES i.e., BURLINGTON STORES and Altair Engineering go up and down completely randomly.
Pair Corralation between BURLINGTON STORES and Altair Engineering
Assuming the 90 days trading horizon BURLINGTON STORES is expected to generate 1.66 times less return on investment than Altair Engineering. In addition to that, BURLINGTON STORES is 1.19 times more volatile than Altair Engineering. It trades about 0.04 of its total potential returns per unit of risk. Altair Engineering is currently generating about 0.09 per unit of volatility. If you would invest 4,500 in Altair Engineering on September 2, 2024 and sell it today you would earn a total of 5,450 from holding Altair Engineering or generate 121.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BURLINGTON STORES vs. Altair Engineering
Performance |
| Timeline |
| BURLINGTON STORES |
| Altair Engineering |
BURLINGTON STORES and Altair Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BURLINGTON STORES and Altair Engineering
The main advantage of trading using opposite BURLINGTON STORES and Altair Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BURLINGTON STORES 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.| BURLINGTON STORES vs. SIVERS SEMICONDUCTORS AB | BURLINGTON STORES vs. Darden Restaurants | BURLINGTON STORES vs. Reliance Steel Aluminum | BURLINGTON STORES vs. Q2M Managementberatung AG |
| Altair Engineering vs. Microsoft | Altair Engineering vs. Superior Plus Corp | Altair Engineering vs. NMI Holdings | Altair Engineering vs. Origin Agritech |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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