Correlation Between Align Technology and GB Group
Can any of the company-specific risk be diversified away by investing in both Align Technology and GB Group 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 GB Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and GB Group plc, you can compare the effects of market volatilities on Align Technology and GB Group 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 GB Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and GB Group.
Diversification Opportunities for Align Technology and GB Group
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Align and 0GB is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and GB Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GB Group plc 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 GB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GB Group plc has no effect on the direction of Align Technology i.e., Align Technology and GB Group go up and down completely randomly.
Pair Corralation between Align Technology and GB Group
Assuming the 90 days horizon Align Technology is expected to generate 1.0 times more return on investment than GB Group. However, Align Technology is 1.0 times less risky than GB Group. It trades about 0.34 of its potential returns per unit of risk. GB Group plc is currently generating about -0.02 per unit of risk. If you would invest 20,190 in Align Technology on October 26, 2024 and sell it today you would earn a total of 2,040 from holding Align Technology or generate 10.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Align Technology vs. GB Group plc
Performance |
| Timeline |
| Align Technology |
| GB Group plc |
Align Technology and GB Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and GB Group
The main advantage of trading using opposite Align Technology and GB Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, GB Group 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 GB Group will offset losses from the drop in GB Group's long position.| Align Technology vs. Abbott Laboratories | Align Technology vs. Abbott Laboratories | Align Technology vs. Medtronic PLC | Align Technology vs. Stryker |
| GB Group vs. Align Technology | GB Group vs. Treasury Wine Estates | GB Group vs. American Eagle Outfitters | GB Group vs. Micron 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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