Correlation Between Altair Engineering and Nike

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

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

Diversification Opportunities for Altair Engineering and Nike

-0.05

Correlation Coefficient

Altair Engineering  Nike

Good diversification

The 3 months correlation between Altair and Nike is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of Altair Engineering i.e., Altair Engineering and Nike go up and down completely randomly.

Pair Corralation between Altair Engineering and Nike

Assuming the 90 days horizon Altair Engineering is expected to generate 0.35 times more return on investment than Nike. However, Altair Engineering is 2.82 times less risky than Nike. It trades about -0.02 of its potential returns per unit of risk. Nike Inc is currently generating about -0.06 per unit of risk. If you would invest  10,300  in Altair Engineering on December 20, 2024 and sell it today you would lose (100.00) from holding Altair Engineering or give up 0.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Altair Engineering  vs.  Nike Inc

Altair Engineering

Risk-Adjusted Performance

Very Weak

Over the last 90 days Altair Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Altair Engineering is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Nike Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nike Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Altair Engineering and Nike

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

The idea behind Altair Engineering and Nike Inc 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.