Correlation Between NORTHEAST UTILITIES and Altair Engineering
Can any of the company-specific risk be diversified away by investing in both NORTHEAST UTILITIES 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 NORTHEAST UTILITIES and Altair Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORTHEAST UTILITIES and Altair Engineering, you can compare the effects of market volatilities on NORTHEAST UTILITIES 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 NORTHEAST UTILITIES with a short position of Altair Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORTHEAST UTILITIES and Altair Engineering.
Diversification Opportunities for NORTHEAST UTILITIES and Altair Engineering
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NORTHEAST and Altair is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding NORTHEAST UTILITIES and Altair Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering and NORTHEAST UTILITIES 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 NORTHEAST UTILITIES 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 NORTHEAST UTILITIES i.e., NORTHEAST UTILITIES and Altair Engineering go up and down completely randomly.
Pair Corralation between NORTHEAST UTILITIES and Altair Engineering
Assuming the 90 days trading horizon NORTHEAST UTILITIES is expected to under-perform the Altair Engineering. In addition to that, NORTHEAST UTILITIES is 2.52 times more volatile than Altair Engineering. It trades about -0.05 of its total potential returns per unit of risk. Altair Engineering is currently generating about 0.08 per unit of volatility. If you would invest 10,400 in Altair Engineering on October 26, 2024 and sell it today you would earn a total of 100.00 from holding Altair Engineering or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
NORTHEAST UTILITIES vs. Altair Engineering
Performance |
| Timeline |
| NORTHEAST UTILITIES |
| Altair Engineering |
NORTHEAST UTILITIES and Altair Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORTHEAST UTILITIES and Altair Engineering
The main advantage of trading using opposite NORTHEAST UTILITIES and Altair Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORTHEAST UTILITIES 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.| NORTHEAST UTILITIES vs. Apple Inc | NORTHEAST UTILITIES vs. Apple Inc | NORTHEAST UTILITIES vs. Apple Inc | NORTHEAST UTILITIES vs. Apple Inc |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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