Correlation Between Align Technology and Inspire Medical
Can any of the company-specific risk be diversified away by investing in both Align Technology and Inspire Medical 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 Inspire Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and Inspire Medical Systems, you can compare the effects of market volatilities on Align Technology and Inspire Medical 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 Inspire Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and Inspire Medical.
Diversification Opportunities for Align Technology and Inspire Medical
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Align and Inspire is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Inspire Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspire Medical Systems 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 Inspire Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspire Medical Systems has no effect on the direction of Align Technology i.e., Align Technology and Inspire Medical go up and down completely randomly.
Pair Corralation between Align Technology and Inspire Medical
Assuming the 90 days horizon Align Technology is expected to generate 0.46 times more return on investment than Inspire Medical. However, Align Technology is 2.17 times less risky than Inspire Medical. It trades about 0.3 of its potential returns per unit of risk. Inspire Medical Systems is currently generating about -0.02 per unit of risk. If you would invest 20,190 in Align Technology on October 25, 2024 and sell it today you would earn a total of 1,720 from holding Align Technology or generate 8.52% 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. Inspire Medical Systems
Performance |
| Timeline |
| Align Technology |
| Inspire Medical Systems |
Align Technology and Inspire Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and Inspire Medical
The main advantage of trading using opposite Align Technology and Inspire Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, Inspire Medical 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 Inspire Medical will offset losses from the drop in Inspire Medical's long position.| Align Technology vs. SQUIRREL MEDIA SA | Align Technology vs. RCS MediaGroup SpA | Align Technology vs. STMICROELECTRONICS | Align Technology vs. Live Nation Entertainment |
| Inspire Medical vs. Lamar Advertising | Inspire Medical vs. GungHo Online Entertainment | Inspire Medical vs. Darden Restaurants | Inspire Medical vs. YATRA ONLINE DL 0001 |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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