Correlation Between Freshpet Inc and Altair Engineering

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Can any of the company-specific risk be diversified away by investing in both Freshpet 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 Freshpet 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 Freshpet Inc CS and Altair Engineering, you can compare the effects of market volatilities on Freshpet 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 Freshpet Inc with a short position of Altair Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freshpet Inc and Altair Engineering.

Diversification Opportunities for Freshpet Inc and Altair Engineering

-0.34
  Correlation Coefficient

Very good diversification

The 3 months correlation between Freshpet and Altair is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Freshpet Inc CS and Altair Engineering Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Engineering and Freshpet 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 Freshpet Inc CS 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 Freshpet Inc i.e., Freshpet Inc and Altair Engineering go up and down completely randomly.

Pair Corralation between Freshpet Inc and Altair Engineering

Given the investment horizon of 90 days Freshpet Inc CS is expected to generate 1.09 times more return on investment than Altair Engineering. However, Freshpet Inc is 1.09 times more volatile than Altair Engineering. It trades about 0.21 of its potential returns per unit of risk. Altair Engineering is currently generating about 0.0 per unit of risk. If you would invest  5,886  in Freshpet Inc CS on August 28, 2022 and sell it today you would earn a total of  786.00  from holding Freshpet Inc CS or generate 13.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Freshpet Inc CS  vs.  Altair Engineering Inc

 Performance (%) 
       Timeline  
Freshpet Inc CS 
Freshpet Performance
14 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Freshpet Inc CS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Freshpet Inc unveiled solid returns over the last few months and may actually be approaching a breakup point.

Freshpet Price Channel

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 latest abnormal performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Altair Price Channel

Freshpet Inc and Altair Engineering Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Freshpet Inc and Altair Engineering

The main advantage of trading using opposite Freshpet Inc and Altair Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freshpet 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.
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The idea behind Freshpet Inc CS 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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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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