Correlation Between Altair Engineering and Boeing

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

Diversification Opportunities for Altair Engineering and Boeing

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Altair and Boeing is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering Inc and Boeing Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing Company 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 Boeing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boeing Company has no effect on the direction of Altair Engineering i.e., Altair Engineering and Boeing go up and down completely randomly.

Pair Corralation between Altair Engineering and Boeing

Given the investment horizon of 90 days Altair Engineering is expected to generate 0.55 times more return on investment than Boeing. However, Altair Engineering is 1.82 times less risky than Boeing. It trades about -0.3 of its potential returns per unit of risk. Boeing Company is currently generating about -0.37 per unit of risk. If you would invest  4,934  in Altair Engineering on July 3, 2022 and sell it today you would lose (512.00)  from holding Altair Engineering or give up 10.38% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

Altair Engineering Inc  vs.  Boeing Company

 Performance (%) 
       Timeline  
Altair Engineering 
Altair Performance
0 of 100
Over the last 90 days Altair Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in November 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Altair Price Channel

Boeing Company 
Boeing Performance
0 of 100
Over the last 90 days Boeing Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Boeing Price Channel

Altair Engineering and Boeing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Altair Engineering and Boeing

The main advantage of trading using opposite Altair Engineering and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altair Engineering position performs unexpectedly, Boeing 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 Boeing will offset losses from the drop in Boeing's long position.
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The idea behind Altair Engineering and Boeing Company 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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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 Analyst Recommendations module to analyst recommendations and target price estimates broken down by several categories.

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