Correlation Between Altair Engineering and Mckesson Corp

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

Diversification Opportunities for Altair Engineering and Mckesson Corp

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between Altair and Mckesson is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering Inc and Mckesson Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mckesson Corp 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 Mckesson Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mckesson Corp has no effect on the direction of Altair Engineering i.e., Altair Engineering and Mckesson Corp go up and down completely randomly.

Pair Corralation between Altair Engineering and Mckesson Corp

Given the investment horizon of 90 days Altair Engineering is expected to generate 10.61 times less return on investment than Mckesson Corp. In addition to that, Altair Engineering is 1.51 times more volatile than Mckesson Corp. It trades about 0.01 of its total potential returns per unit of risk. Mckesson Corp is currently generating about 0.12 per unit of volatility. If you would invest  14,871  in Mckesson Corp on July 2, 2022 and sell it today you would earn a total of  19,559  from holding Mckesson Corp or generate 131.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Altair Engineering Inc  vs.  Mckesson Corp

 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 weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in October 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Altair Price Channel

Mckesson Corp 
Mckesson Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Mckesson Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting fundamental indicators, Mckesson Corp may actually be approaching a critical reversion point that can send shares even higher in October 2022.

Mckesson Price Channel

Altair Engineering and Mckesson Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Altair Engineering and Mckesson Corp

The main advantage of trading using opposite Altair Engineering and Mckesson Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altair Engineering position performs unexpectedly, Mckesson Corp 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 Mckesson Corp will offset losses from the drop in Mckesson Corp's long position.
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The idea behind Altair Engineering and Mckesson Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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