Correlation Between LOANDEPOT INC and Altair Engineering

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

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

Diversification Opportunities for LOANDEPOT INC and Altair Engineering

-0.09

Correlation Coefficient

LOANDEPOT INC  Altair Engineering

Good diversification

The 3 months correlation between LOANDEPOT and Altair is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding LOANDEPOT INC A and Altair Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering and LOANDEPOT INC 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 LOANDEPOT INC A 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 LOANDEPOT INC i.e., LOANDEPOT INC and Altair Engineering go up and down completely randomly.

Pair Corralation between LOANDEPOT INC and Altair Engineering

Assuming the 90 days horizon LOANDEPOT INC A is expected to under-perform the Altair Engineering. In addition to that, LOANDEPOT INC is 5.49 times more volatile than Altair Engineering. It trades about -0.2 of its total potential returns per unit of risk. Altair Engineering is currently generating about 0.44 per unit of volatility. If you would invest  10,100  in Altair Engineering on October 8, 2024 and sell it today you would earn a total of  500.00  from holding Altair Engineering or generate 4.95% return on investment over 90 days.

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

LOANDEPOT INC A  vs.  Altair Engineering

LOANDEPOT INC A

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LOANDEPOT INC A are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, LOANDEPOT INC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Altair Engineering

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Altair Engineering are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Altair Engineering reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LOANDEPOT INC and Altair Engineering

The main advantage of trading using opposite LOANDEPOT INC and Altair Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOANDEPOT INC 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 LOANDEPOT INC A 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.