Correlation Between Align Technology and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Align Technology and Berkshire Hathaway 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 Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and Berkshire Hathaway, you can compare the effects of market volatilities on Align Technology and Berkshire Hathaway 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 Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and Berkshire Hathaway.
Diversification Opportunities for Align Technology and Berkshire Hathaway
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Align and Berkshire is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway 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 Berkshire Hathaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hathaway has no effect on the direction of Align Technology i.e., Align Technology and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Align Technology and Berkshire Hathaway
Assuming the 90 days trading horizon Align Technology is expected to generate 1.32 times more return on investment than Berkshire Hathaway. However, Align Technology is 1.32 times more volatile than Berkshire Hathaway. It trades about 0.3 of its potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.07 per unit of risk. If you would invest 32,736 in Align Technology on September 14, 2024 and sell it today you would earn a total of 3,109 from holding Align Technology or generate 9.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Align Technology vs. Berkshire Hathaway
Performance |
| Timeline |
| Align Technology |
| Berkshire Hathaway |
Align Technology and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and Berkshire Hathaway
The main advantage of trading using opposite Align Technology and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, Berkshire Hathaway 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 Berkshire Hathaway will offset losses from the drop in Berkshire Hathaway's long position.| Align Technology vs. Take Two Interactive Software | Align Technology vs. Apartment Investment and | Align Technology vs. MAHLE Metal Leve | Align Technology vs. Verizon Communications |
| Berkshire Hathaway vs. Take Two Interactive Software | Berkshire Hathaway vs. BIONTECH SE DRN | Berkshire Hathaway vs. salesforce inc | Berkshire Hathaway vs. Lupatech SA |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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