Correlation Between Altair Engineering and PFIZER

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

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

Diversification Opportunities for Altair Engineering and PFIZER

0.4

Correlation Coefficient

Altair Engineering  PFIZER

Very weak diversification

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

Pair Corralation between Altair Engineering and PFIZER

Given the investment horizon of 90 days Altair Engineering is expected to generate 0.58 times more return on investment than PFIZER. However, Altair Engineering is 1.73 times less risky than PFIZER. It trades about 0.28 of its potential returns per unit of risk. PFIZER INC is currently generating about 0.11 per unit of risk. If you would invest  10,902  in Altair Engineering on December 24, 2024 and sell it today you would earn a total of  273.00  from holding Altair Engineering or generate 2.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

Altair Engineering  vs.  PFIZER INC

Altair Engineering

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Altair Engineering are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Altair Engineering is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

PFIZER INC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PFIZER INC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, PFIZER is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Altair Engineering and PFIZER

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

The idea behind Altair Engineering and PFIZER 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.