Correlation Between Align Technology and Este Lauder
Can any of the company-specific risk be diversified away by investing in both Align Technology and Este Lauder 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 Este Lauder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and The Este Lauder, you can compare the effects of market volatilities on Align Technology and Este Lauder 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 Este Lauder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and Este Lauder.
Diversification Opportunities for Align Technology and Este Lauder
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Align and Este is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and The Este Lauder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Este Lauder 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 Este Lauder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Este Lauder has no effect on the direction of Align Technology i.e., Align Technology and Este Lauder go up and down completely randomly.
Pair Corralation between Align Technology and Este Lauder
Assuming the 90 days trading horizon Align Technology is expected to generate 1.41 times less return on investment than Este Lauder. But when comparing it to its historical volatility, Align Technology is 2.16 times less risky than Este Lauder. It trades about 0.42 of its potential returns per unit of risk. The Este Lauder is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,595 in The Este Lauder on September 5, 2024 and sell it today you would earn a total of 305.00 from holding The Este Lauder or generate 19.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Align Technology vs. The Este Lauder
Performance |
| Timeline |
| Align Technology |
| Este Lauder |
Align Technology and Este Lauder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and Este Lauder
The main advantage of trading using opposite Align Technology and Este Lauder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, Este Lauder 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 Este Lauder will offset losses from the drop in Este Lauder's long position.| Align Technology vs. Ameriprise Financial | Align Technology vs. Credit Acceptance | Align Technology vs. Extra Space Storage | Align Technology vs. Sumitomo Mitsui Financial |
| Este Lauder vs. Align Technology | Este Lauder vs. STMicroelectronics NV | Este Lauder vs. Brpr Corporate Offices | Este Lauder vs. Mitsubishi UFJ Financial |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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