Correlation Between NORWEGIAN AIR and Altair Engineering

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

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

Diversification Opportunities for NORWEGIAN AIR and Altair Engineering

-0.44

Correlation Coefficient

NORWEGIAN AIR  Altair Engineering

Very good diversification

The 3 months correlation between NORWEGIAN and Altair is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding NORWEGIAN AIR SHUT and Altair Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering and NORWEGIAN AIR 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 NORWEGIAN AIR SHUT 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 NORWEGIAN AIR i.e., NORWEGIAN AIR and Altair Engineering go up and down completely randomly.

Pair Corralation between NORWEGIAN AIR and Altair Engineering

Assuming the 90 days trading horizon NORWEGIAN AIR is expected to generate 2.76 times less return on investment than Altair Engineering. In addition to that, NORWEGIAN AIR is 1.62 times more volatile than Altair Engineering. It trades about 0.05 of its total potential returns per unit of risk. Altair Engineering is currently generating about 0.24 per unit of volatility. If you would invest  7,700  in Altair Engineering on September 11, 2024 and sell it today you would earn a total of  2,400  from holding Altair Engineering or generate 31.17% return on investment over 90 days.

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

NORWEGIAN AIR SHUT  vs.  Altair Engineering

NORWEGIAN AIR SHUT

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NORWEGIAN AIR SHUT are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, NORWEGIAN AIR may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Altair Engineering

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Altair Engineering are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Altair Engineering reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NORWEGIAN AIR and Altair Engineering

The main advantage of trading using opposite NORWEGIAN AIR and Altair Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORWEGIAN AIR 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 NORWEGIAN AIR SHUT 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.