Correlation Between Align Technology and Franco Nevada
Can any of the company-specific risk be diversified away by investing in both Align Technology and Franco Nevada 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 Franco Nevada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and Franco Nevada, you can compare the effects of market volatilities on Align Technology and Franco Nevada 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 Franco Nevada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and Franco Nevada.
Diversification Opportunities for Align Technology and Franco Nevada
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Align and Franco is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Franco Nevada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franco Nevada 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 Franco Nevada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franco Nevada has no effect on the direction of Align Technology i.e., Align Technology and Franco Nevada go up and down completely randomly.
Pair Corralation between Align Technology and Franco Nevada
Assuming the 90 days horizon Align Technology is expected to generate 0.99 times more return on investment than Franco Nevada. However, Align Technology is 1.01 times less risky than Franco Nevada. It trades about 0.35 of its potential returns per unit of risk. Franco Nevada is currently generating about 0.33 per unit of risk. If you would invest 19,875 in Align Technology on October 22, 2024 and sell it today you would earn a total of 1,905 from holding Align Technology or generate 9.58% 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. Franco Nevada
Performance |
| Timeline |
| Align Technology |
| Franco Nevada |
Align Technology and Franco Nevada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and Franco Nevada
The main advantage of trading using opposite Align Technology and Franco Nevada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, Franco Nevada 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 Franco Nevada will offset losses from the drop in Franco Nevada's long position.| Align Technology vs. AGRICULTBK HADR25 YC | Align Technology vs. DAIDO METAL TD | Align Technology vs. Jacquet Metal Service | Align Technology vs. Tokyu Construction Co |
| Franco Nevada vs. Townsquare Media | Franco Nevada vs. Live Nation Entertainment | Franco Nevada vs. SERI INDUSTRIAL EO | Franco Nevada vs. MAGNUM MINING EXP |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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