Correlation Between Align Technology and Edwards Lifesciences
Can any of the company-specific risk be diversified away by investing in both Align Technology and Edwards Lifesciences 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 Edwards Lifesciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and Edwards Lifesciences, you can compare the effects of market volatilities on Align Technology and Edwards Lifesciences 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 Edwards Lifesciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and Edwards Lifesciences.
Diversification Opportunities for Align Technology and Edwards Lifesciences
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Align and Edwards is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Edwards Lifesciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edwards Lifesciences 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 Edwards Lifesciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edwards Lifesciences has no effect on the direction of Align Technology i.e., Align Technology and Edwards Lifesciences go up and down completely randomly.
Pair Corralation between Align Technology and Edwards Lifesciences
Assuming the 90 days horizon Align Technology is expected to under-perform the Edwards Lifesciences. But the stock apears to be less risky and, when comparing its historical volatility, Align Technology is 1.0 times less risky than Edwards Lifesciences. The stock trades about -0.31 of its potential returns per unit of risk. The Edwards Lifesciences is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 6,530 in Edwards Lifesciences on November 27, 2024 and sell it today you would earn a total of 460.00 from holding Edwards Lifesciences or generate 7.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Align Technology vs. Edwards Lifesciences
Performance |
| Timeline |
| Align Technology |
| Edwards Lifesciences |
Align Technology and Edwards Lifesciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and Edwards Lifesciences
The main advantage of trading using opposite Align Technology and Edwards Lifesciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, Edwards Lifesciences 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 Edwards Lifesciences will offset losses from the drop in Edwards Lifesciences' long position.| Align Technology vs. PEPTONIC MEDICAL | Align Technology vs. INDO RAMA SYNTHETIC | Align Technology vs. Peijia Medical Limited | Align Technology vs. CHEMICAL INDUSTRIES |
| Edwards Lifesciences vs. GRUPO CARSO A1 | Edwards Lifesciences vs. Direct Line Insurance | Edwards Lifesciences vs. CREDIT AGRICOLE | Edwards Lifesciences vs. Chiba Bank |
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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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