Correlation Between Altair Engineering and Willis Lease

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Altair Engineering and Willis Lease 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 Willis Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altair Engineering and Willis Lease Finance, you can compare the effects of market volatilities on Altair Engineering and Willis Lease 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 Willis Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altair Engineering and Willis Lease.

Diversification Opportunities for Altair Engineering and Willis Lease

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Altair and Willis is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and Willis Lease Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willis Lease Finance 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 Willis Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willis Lease Finance has no effect on the direction of Altair Engineering i.e., Altair Engineering and Willis Lease go up and down completely randomly.

Pair Corralation between Altair Engineering and Willis Lease

Given the investment horizon of 90 days Altair Engineering is expected to generate 1.76 times less return on investment than Willis Lease. But when comparing it to its historical volatility, Altair Engineering is 1.35 times less risky than Willis Lease. It trades about 0.08 of its potential returns per unit of risk. Willis Lease Finance is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  5,690  in Willis Lease Finance on October 11, 2024 and sell it today you would earn a total of  15,525  from holding Willis Lease Finance or generate 272.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Altair Engineering  vs.  Willis Lease Finance

 Performance 
       Timeline  
Altair Engineering 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
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.
Willis Lease Finance 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Willis Lease Finance are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Willis Lease exhibited solid returns over the last few months and may actually be approaching a breakup point.

Altair Engineering and Willis Lease Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Altair Engineering and Willis Lease

The main advantage of trading using opposite Altair Engineering and Willis Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altair Engineering position performs unexpectedly, Willis Lease 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 Willis Lease will offset losses from the drop in Willis Lease's long position.
The idea behind Altair Engineering and Willis Lease Finance 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.
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

Other Complementary Tools

Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Equity Valuation
Check real value of public entities based on technical and fundamental data
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Top Crypto Exchanges
Search and analyze digital assets across top global cryptocurrency exchanges