Correlation Between Align Technology and MACOM Technology
Can any of the company-specific risk be diversified away by investing in both Align Technology and MACOM Technology 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 MACOM Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and MACOM Technology Solutions, you can compare the effects of market volatilities on Align Technology and MACOM Technology 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 MACOM Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and MACOM Technology.
Diversification Opportunities for Align Technology and MACOM Technology
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Align and MACOM is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and MACOM Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MACOM Technology Sol 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 MACOM Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MACOM Technology Sol has no effect on the direction of Align Technology i.e., Align Technology and MACOM Technology go up and down completely randomly.
Pair Corralation between Align Technology and MACOM Technology
Assuming the 90 days horizon Align Technology is expected to under-perform the MACOM Technology. In addition to that, Align Technology is 1.26 times more volatile than MACOM Technology Solutions. It trades about -0.04 of its total potential returns per unit of risk. MACOM Technology Solutions is currently generating about 0.08 per unit of volatility. If you would invest 7,650 in MACOM Technology Solutions on August 29, 2024 and sell it today you would earn a total of 4,750 from holding MACOM Technology Solutions or generate 62.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Align Technology vs. MACOM Technology Solutions
Performance |
| Timeline |
| Align Technology |
| MACOM Technology Sol |
Align Technology and MACOM Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and MACOM Technology
The main advantage of trading using opposite Align Technology and MACOM Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, MACOM Technology 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 MACOM Technology will offset losses from the drop in MACOM Technology's long position.| Align Technology vs. Abbott Laboratories | Align Technology vs. Medtronic PLC | Align Technology vs. Stryker | Align Technology vs. Boston Scientific |
| MACOM Technology vs. Choice Hotels International | MACOM Technology vs. Xenia Hotels Resorts | MACOM Technology vs. Pebblebrook Hotel Trust | MACOM Technology vs. Playa Hotels Resorts |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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