Correlation Between PREMIER FOODS and Altair Engineering
Can any of the company-specific risk be diversified away by investing in both PREMIER FOODS 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 PREMIER FOODS and Altair Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PREMIER FOODS and Altair Engineering, you can compare the effects of market volatilities on PREMIER FOODS 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 PREMIER FOODS with a short position of Altair Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of PREMIER FOODS and Altair Engineering.
Diversification Opportunities for PREMIER FOODS and Altair Engineering
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PREMIER and Altair is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding PREMIER FOODS and Altair Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering and PREMIER FOODS 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 PREMIER FOODS 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 PREMIER FOODS i.e., PREMIER FOODS and Altair Engineering go up and down completely randomly.
Pair Corralation between PREMIER FOODS and Altair Engineering
Assuming the 90 days trading horizon PREMIER FOODS is expected to generate 1.51 times less return on investment than Altair Engineering. But when comparing it to its historical volatility, PREMIER FOODS is 1.64 times less risky than Altair Engineering. It trades about 0.1 of its potential returns per unit of risk. Altair Engineering is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 7,850 in Altair Engineering on September 1, 2024 and sell it today you would earn a total of 2,100 from holding Altair Engineering or generate 26.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PREMIER FOODS vs. Altair Engineering
Performance |
| Timeline |
| PREMIER FOODS |
| Altair Engineering |
PREMIER FOODS and Altair Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PREMIER FOODS and Altair Engineering
The main advantage of trading using opposite PREMIER FOODS and Altair Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PREMIER FOODS 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.| PREMIER FOODS vs. SIVERS SEMICONDUCTORS AB | PREMIER FOODS vs. Darden Restaurants | PREMIER FOODS vs. Reliance Steel Aluminum | PREMIER FOODS vs. Q2M Managementberatung AG |
| Altair Engineering vs. Calibre Mining Corp | Altair Engineering vs. Compagnie Plastic Omnium | Altair Engineering vs. Plastic Omnium | Altair Engineering vs. GOODYEAR T RUBBER |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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