Correlation Between Altair Engineering and United Parks

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

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

Diversification Opportunities for Altair Engineering and United Parks

0.4

Correlation Coefficient

Altair Engineering  United Parks

Very weak diversification

The 3 months correlation between Altair and United is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and United Parks Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parks Resorts 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 United Parks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parks Resorts has no effect on the direction of Altair Engineering i.e., Altair Engineering and United Parks go up and down completely randomly.

Pair Corralation between Altair Engineering and United Parks

Given the investment horizon of 90 days Altair Engineering is expected to generate 0.96 times more return on investment than United Parks. However, Altair Engineering is 1.04 times less risky than United Parks. It trades about 0.09 of its potential returns per unit of risk. United Parks Resorts is currently generating about 0.01 per unit of risk. If you would invest  5,058  in Altair Engineering on October 9, 2024 and sell it today you would earn a total of  5,933  from holding Altair Engineering or generate 117.3% return on investment over 90 days.

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

Altair Engineering  vs.  United Parks Resorts

Altair Engineering

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altair Engineering are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Altair Engineering reported solid returns over the last few months and may actually be approaching a breakup point.

United Parks Resorts

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Parks Resorts are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward-looking signals, United Parks unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altair Engineering and United Parks

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

The idea behind Altair Engineering and United Parks Resorts 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..