Correlation Between Align Technology and GP Investments
Can any of the company-specific risk be diversified away by investing in both Align Technology and GP Investments 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 GP Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and GP Investments, you can compare the effects of market volatilities on Align Technology and GP Investments 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 GP Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and GP Investments.
Diversification Opportunities for Align Technology and GP Investments
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Align and GPIV33 is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and GP Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GP Investments 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 GP Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GP Investments has no effect on the direction of Align Technology i.e., Align Technology and GP Investments go up and down completely randomly.
Pair Corralation between Align Technology and GP Investments
Assuming the 90 days trading horizon Align Technology is expected to generate 1.52 times less return on investment than GP Investments. But when comparing it to its historical volatility, Align Technology is 2.63 times less risky than GP Investments. It trades about 0.21 of its potential returns per unit of risk. GP Investments is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 373.00 in GP Investments on August 27, 2024 and sell it today you would earn a total of 25.00 from holding GP Investments or generate 6.7% 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. GP Investments
Performance |
| Timeline |
| Align Technology |
| GP Investments |
Align Technology and GP Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and GP Investments
The main advantage of trading using opposite Align Technology and GP Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, GP Investments 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 GP Investments will offset losses from the drop in GP Investments' long position.| Align Technology vs. Abbott Laboratories | Align Technology vs. Boston Scientific | Align Technology vs. Energisa SA | Align Technology vs. BTG Pactual Logstica |
| GP Investments vs. Verizon Communications | GP Investments vs. Apartment Investment and | GP Investments vs. New Oriental Education | GP Investments vs. METISA Metalrgica Timboense |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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