Correlation Between Align Technology and Jefferies Financial
Can any of the company-specific risk be diversified away by investing in both Align Technology and Jefferies Financial 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 Jefferies Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and Jefferies Financial Group, you can compare the effects of market volatilities on Align Technology and Jefferies Financial 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 Jefferies Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and Jefferies Financial.
Diversification Opportunities for Align Technology and Jefferies Financial
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Align and Jefferies is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Jefferies Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jefferies Financial 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 Jefferies Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jefferies Financial has no effect on the direction of Align Technology i.e., Align Technology and Jefferies Financial go up and down completely randomly.
Pair Corralation between Align Technology and Jefferies Financial
Assuming the 90 days trading horizon Align Technology is expected to generate 0.77 times more return on investment than Jefferies Financial. However, Align Technology is 1.3 times less risky than Jefferies Financial. It trades about -0.23 of its potential returns per unit of risk. Jefferies Financial Group is currently generating about -0.22 per unit of risk. If you would invest 35,845 in Align Technology on October 14, 2024 and sell it today you would lose (3,245) from holding Align Technology or give up 9.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Align Technology vs. Jefferies Financial Group
Performance |
| Timeline |
| Align Technology |
| Jefferies Financial |
Align Technology and Jefferies Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and Jefferies Financial
The main advantage of trading using opposite Align Technology and Jefferies Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, Jefferies Financial 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 Jefferies Financial will offset losses from the drop in Jefferies Financial's long position.| Align Technology vs. Energisa SA | Align Technology vs. BTG Pactual Logstica | Align Technology vs. Plano Plano Desenvolvimento | Align Technology vs. Ares Management |
| Jefferies Financial vs. METISA Metalrgica Timboense | Jefferies Financial vs. Check Point Software | Jefferies Financial vs. MAHLE Metal Leve | Jefferies Financial vs. Align Technology |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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