Correlation Between Align Technology and Baxter International
Can any of the company-specific risk be diversified away by investing in both Align Technology and Baxter International 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 Align Technology and Baxter International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and Baxter International, you can compare the effects of market volatilities on Align Technology and Baxter International 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 Align Technology with a short position of Baxter International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and Baxter International.
Diversification Opportunities for Align Technology and Baxter International
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Align and Baxter is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Baxter International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baxter International and Align Technology 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 Align Technology are associated (or correlated) with Baxter International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baxter International has no effect on the direction of Align Technology i.e., Align Technology and Baxter International go up and down completely randomly.
Pair Corralation between Align Technology and Baxter International
Assuming the 90 days trading horizon Align Technology is expected to generate 0.6 times more return on investment than Baxter International. However, Align Technology is 1.67 times less risky than Baxter International. It trades about -0.03 of its potential returns per unit of risk. Baxter International is currently generating about -0.12 per unit of risk. If you would invest 33,420 in Align Technology on August 26, 2024 and sell it today you would lose (684.00) from holding Align Technology or give up 2.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Align Technology vs. Baxter International
Performance |
| Timeline |
| Align Technology |
| Baxter International |
Align Technology and Baxter International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and Baxter International
The main advantage of trading using opposite Align Technology and Baxter International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, Baxter International 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 Baxter International will offset losses from the drop in Baxter International's long position.| Align Technology vs. Abbott Laboratories | Align Technology vs. Boston Scientific | Align Technology vs. Energisa SA | Align Technology vs. BTG Pactual Logstica |
| Baxter International vs. Align Technology | Baxter International vs. Bread Financial Holdings | Baxter International vs. Mitsubishi UFJ Financial | Baxter International vs. Palantir Technologies |
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 the Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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