Correlation Between Align Technology and Metalurgica Gerdau
Can any of the company-specific risk be diversified away by investing in both Align Technology and Metalurgica Gerdau 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 Metalurgica Gerdau into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and Metalurgica Gerdau SA, you can compare the effects of market volatilities on Align Technology and Metalurgica Gerdau 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 Metalurgica Gerdau. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and Metalurgica Gerdau.
Diversification Opportunities for Align Technology and Metalurgica Gerdau
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Align and Metalurgica is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Metalurgica Gerdau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalurgica Gerdau 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 Metalurgica Gerdau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalurgica Gerdau has no effect on the direction of Align Technology i.e., Align Technology and Metalurgica Gerdau go up and down completely randomly.
Pair Corralation between Align Technology and Metalurgica Gerdau
Assuming the 90 days trading horizon Align Technology is expected to generate 1.45 times more return on investment than Metalurgica Gerdau. However, Align Technology is 1.45 times more volatile than Metalurgica Gerdau SA. It trades about 0.04 of its potential returns per unit of risk. Metalurgica Gerdau SA is currently generating about 0.02 per unit of risk. If you would invest 25,705 in Align Technology on September 12, 2024 and sell it today you would earn a total of 9,149 from holding Align Technology or generate 35.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.8% |
| Values | Daily Returns |
Align Technology vs. Metalurgica Gerdau SA
Performance |
| Timeline |
| Align Technology |
| Metalurgica Gerdau |
Align Technology and Metalurgica Gerdau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and Metalurgica Gerdau
The main advantage of trading using opposite Align Technology and Metalurgica Gerdau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, Metalurgica Gerdau 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 Metalurgica Gerdau will offset losses from the drop in Metalurgica Gerdau's long position.| Align Technology vs. Fundo Investimento Imobiliario | Align Technology vs. LESTE FDO INV | Align Technology vs. Fras le SA | Align Technology vs. Western Digital |
| Metalurgica Gerdau vs. Usinas Siderrgicas de | Metalurgica Gerdau vs. Gerdau SA | Metalurgica Gerdau vs. Companhia Siderrgica Nacional | Metalurgica Gerdau vs. Companhia Energtica de |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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