Correlation Between Align Technology and Western Union
Can any of the company-specific risk be diversified away by investing in both Align Technology and Western Union 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 Western Union into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and The Western Union, you can compare the effects of market volatilities on Align Technology and Western Union 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 Western Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and Western Union.
Diversification Opportunities for Align Technology and Western Union
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Align and Western is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and The Western Union in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Union 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 Western Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Union has no effect on the direction of Align Technology i.e., Align Technology and Western Union go up and down completely randomly.
Pair Corralation between Align Technology and Western Union
Assuming the 90 days trading horizon Align Technology is expected to generate 2.63 times more return on investment than Western Union. However, Align Technology is 2.63 times more volatile than The Western Union. It trades about 0.31 of its potential returns per unit of risk. The Western Union is currently generating about 0.28 per unit of risk. If you would invest 31,230 in Align Technology on September 2, 2024 and sell it today you would earn a total of 3,624 from holding Align Technology or generate 11.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Align Technology vs. The Western Union
Performance |
| Timeline |
| Align Technology |
| Western Union |
Align Technology and Western Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and Western Union
The main advantage of trading using opposite Align Technology and Western Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, Western Union 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 Western Union will offset losses from the drop in Western Union's long position.| Align Technology vs. Abbott Laboratories | Align Technology vs. Fras le SA | Align Technology vs. Western Digital | Align Technology vs. Energisa SA |
| Western Union vs. Lloyds Banking Group | Western Union vs. MAHLE Metal Leve | Western Union vs. SVB Financial Group | Western Union 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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