Correlation Between Align Technology and United Airlines
Can any of the company-specific risk be diversified away by investing in both Align Technology and United Airlines 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 United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and United Airlines Holdings, you can compare the effects of market volatilities on Align Technology and United Airlines 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 United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and United Airlines.
Diversification Opportunities for Align Technology and United Airlines
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Align and United is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines Holdings 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 United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of Align Technology i.e., Align Technology and United Airlines go up and down completely randomly.
Pair Corralation between Align Technology and United Airlines
Assuming the 90 days trading horizon Align Technology is expected to generate 3.98 times less return on investment than United Airlines. But when comparing it to its historical volatility, Align Technology is 2.25 times less risky than United Airlines. It trades about 0.22 of its potential returns per unit of risk. United Airlines Holdings is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 17,782 in United Airlines Holdings on September 13, 2024 and sell it today you would earn a total of 11,682 from holding United Airlines Holdings or generate 65.7% 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. United Airlines Holdings
Performance |
| Timeline |
| Align Technology |
| United Airlines Holdings |
Align Technology and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and United Airlines
The main advantage of trading using opposite Align Technology and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, United Airlines 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 United Airlines will offset losses from the drop in United Airlines' 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 |
| United Airlines vs. Align Technology | United Airlines vs. The Home Depot | United Airlines vs. Brpr Corporate Offices | United Airlines vs. Paycom Software |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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