Correlation Between Align Technology and Federal Agricultural
Can any of the company-specific risk be diversified away by investing in both Align Technology and Federal Agricultural 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 Federal Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and Federal Agricultural Mortgage, you can compare the effects of market volatilities on Align Technology and Federal Agricultural 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 Federal Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and Federal Agricultural.
Diversification Opportunities for Align Technology and Federal Agricultural
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Align and Federal is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Federal Agricultural Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Agricultural 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 Federal Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Agricultural has no effect on the direction of Align Technology i.e., Align Technology and Federal Agricultural go up and down completely randomly.
Pair Corralation between Align Technology and Federal Agricultural
Assuming the 90 days horizon Align Technology is expected to generate 5.6 times less return on investment than Federal Agricultural. In addition to that, Align Technology is 1.38 times more volatile than Federal Agricultural Mortgage. It trades about 0.01 of its total potential returns per unit of risk. Federal Agricultural Mortgage is currently generating about 0.06 per unit of volatility. If you would invest 10,412 in Federal Agricultural Mortgage on October 11, 2024 and sell it today you would earn a total of 7,888 from holding Federal Agricultural Mortgage or generate 75.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Align Technology vs. Federal Agricultural Mortgage
Performance |
| Timeline |
| Align Technology |
| Federal Agricultural |
Align Technology and Federal Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and Federal Agricultural
The main advantage of trading using opposite Align Technology and Federal Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, Federal Agricultural 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 Federal Agricultural will offset losses from the drop in Federal Agricultural's long position.| Align Technology vs. Geely Automobile Holdings | Align Technology vs. Choice Hotels International | Align Technology vs. Host Hotels Resorts | Align Technology vs. SOLSTAD OFFSHORE NK |
| Federal Agricultural vs. China Eastern Airlines | Federal Agricultural vs. AEGEAN AIRLINES | Federal Agricultural vs. ADRIATIC METALS LS 013355 | Federal Agricultural vs. SINGAPORE AIRLINES |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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