Correlation Between Align Technology and Occidental Petroleum
Can any of the company-specific risk be diversified away by investing in both Align Technology and Occidental Petroleum 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 Occidental Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and Occidental Petroleum, you can compare the effects of market volatilities on Align Technology and Occidental Petroleum 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 Occidental Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and Occidental Petroleum.
Diversification Opportunities for Align Technology and Occidental Petroleum
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Align and Occidental is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Occidental Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Occidental Petroleum 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 Occidental Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Occidental Petroleum has no effect on the direction of Align Technology i.e., Align Technology and Occidental Petroleum go up and down completely randomly.
Pair Corralation between Align Technology and Occidental Petroleum
Assuming the 90 days trading horizon Align Technology is expected to generate 1.62 times more return on investment than Occidental Petroleum. However, Align Technology is 1.62 times more volatile than Occidental Petroleum. It trades about 0.03 of its potential returns per unit of risk. Occidental Petroleum is currently generating about 0.0 per unit of risk. If you would invest 25,970 in Align Technology on September 2, 2024 and sell it today you would earn a total of 8,884 from holding Align Technology or generate 34.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
Align Technology vs. Occidental Petroleum
Performance |
| Timeline |
| Align Technology |
| Occidental Petroleum |
Align Technology and Occidental Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and Occidental Petroleum
The main advantage of trading using opposite Align Technology and Occidental Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, Occidental Petroleum 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 Occidental Petroleum will offset losses from the drop in Occidental Petroleum's long position.| Align Technology vs. Abbott Laboratories | Align Technology vs. Fras le SA | Align Technology vs. Western Digital | Align Technology vs. Energisa SA |
| Occidental Petroleum vs. Align Technology | Occidental Petroleum vs. Unity Software | Occidental Petroleum vs. Take Two Interactive Software | Occidental Petroleum vs. Bemobi Mobile Tech |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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