Correlation Between Altair Engineering and Bank of Nova Scotia

Can any of the company-specific risk be diversified away by investing in both Altair Engineering and Bank of Nova Scotia 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 Bank of Nova Scotia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Altair Engineering and The Bank of, you can compare the effects of market volatilities on Altair Engineering and Bank of Nova Scotia 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 Bank of Nova Scotia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altair Engineering and Bank of Nova Scotia.

Diversification Opportunities for Altair Engineering and Bank of Nova Scotia

0.71

Correlation Coefficient

Altair Engineering  Bank of Nova Scotia

Poor diversification

The 3 months correlation between Altair and Bank is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and The Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Nova Scotia 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 Bank of Nova Scotia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Nova Scotia has no effect on the direction of Altair Engineering i.e., Altair Engineering and Bank of Nova Scotia go up and down completely randomly.

Pair Corralation between Altair Engineering and Bank of Nova Scotia

Assuming the 90 days horizon Altair Engineering is expected to generate 0.53 times more return on investment than Bank of Nova Scotia. However, Altair Engineering is 1.87 times less risky than Bank of Nova Scotia. It trades about 0.39 of its potential returns per unit of risk. The Bank of is currently generating about 0.14 per unit of risk. If you would invest  9,500  in Altair Engineering on October 6, 2024 and sell it today you would earn a total of  1,100  from holding Altair Engineering or generate 11.58% 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.  The Bank of

Altair Engineering

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Altair Engineering are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Altair Engineering reported solid returns over the last few months and may actually be approaching a breakup point.

Bank of Nova Scotia

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Bank of are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Bank of Nova Scotia may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Altair Engineering and Bank of Nova Scotia

The main advantage of trading using opposite Altair Engineering and Bank of Nova Scotia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altair Engineering position performs unexpectedly, Bank of Nova Scotia 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 Bank of Nova Scotia will offset losses from the drop in Bank of Nova Scotia's long position.

The idea behind Altair Engineering and The Bank of pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.