Correlation Between Fair Isaac and Altair Engineering

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

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

Diversification Opportunities for Fair Isaac and Altair Engineering

-0.4

Correlation Coefficient

Fair Isaac  Altair Engineering

Very good diversification

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

Pair Corralation between Fair Isaac and Altair Engineering

Given the investment horizon of 90 days Fair Isaac is expected to generate 0.88 times more return on investment than Altair Engineering. However, Fair Isaac is 1.13 times less risky than Altair Engineering. It trades about 0.12 of its potential returns per unit of risk. Altair Engineering is currently generating about 0.08 per unit of risk. If you would invest  67,345  in Fair Isaac on October 26, 2024 and sell it today you would earn a total of  113,878  from holding Fair Isaac or generate 169.1% return on investment over 90 days.

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

Fair Isaac  vs.  Altair Engineering

Fair Isaac

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fair Isaac has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Altair Engineering

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Altair Engineering are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Altair Engineering may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Fair Isaac and Altair Engineering

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

The idea behind Fair Isaac and Altair Engineering 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..