Correlation Between Altair Engineering and Morningstar

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

Diversification Opportunities for Altair Engineering and Morningstar

0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between Altair and Morningstar is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Altair Engineering and Morningstar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morningstar 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 Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morningstar has no effect on the direction of Altair Engineering i.e., Altair Engineering and Morningstar go up and down completely randomly.

Pair Corralation between Altair Engineering and Morningstar

Given the investment horizon of 90 days Altair Engineering is expected to under-perform the Morningstar. In addition to that, Altair Engineering is 1.08 times more volatile than Morningstar. It trades about -0.05 of its total potential returns per unit of risk. Morningstar is currently generating about -0.03 per unit of volatility. If you would invest  31,725  in Morningstar on September 5, 2022 and sell it today you would lose (6,765)  from holding Morningstar or give up 21.32% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Altair Engineering  vs.  Morningstar

 Performance (%) 
       Timeline  
Altair Engineering 
Altair Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Altair Engineering are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Altair Engineering is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Altair Price Channel

Morningstar 
Morningstar Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Morningstar are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite sluggish basic indicators, Morningstar may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Morningstar Price Channel

Altair Engineering and Morningstar Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Altair Engineering and Morningstar

The main advantage of trading using opposite Altair Engineering and Morningstar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altair Engineering position performs unexpectedly, Morningstar 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 Morningstar will offset losses from the drop in Morningstar's long position.
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The idea behind Altair Engineering and Morningstar 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 Probability Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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