Correlation Between Align Technology and PENN NATL
Can any of the company-specific risk be diversified away by investing in both Align Technology and PENN NATL 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 PENN NATL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and PENN NATL GAMING, you can compare the effects of market volatilities on Align Technology and PENN NATL 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 PENN NATL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and PENN NATL.
Diversification Opportunities for Align Technology and PENN NATL
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Align and PENN is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and PENN NATL GAMING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN NATL GAMING 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 PENN NATL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENN NATL GAMING has no effect on the direction of Align Technology i.e., Align Technology and PENN NATL go up and down completely randomly.
Pair Corralation between Align Technology and PENN NATL
Assuming the 90 days horizon Align Technology is expected to generate 0.53 times more return on investment than PENN NATL. However, Align Technology is 1.88 times less risky than PENN NATL. It trades about 0.31 of its potential returns per unit of risk. PENN NATL GAMING is currently generating about 0.13 per unit of risk. If you would invest 19,875 in Align Technology on October 23, 2024 and sell it today you would earn a total of 1,715 from holding Align Technology or generate 8.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.12% |
| Values | Daily Returns |
Align Technology vs. PENN NATL GAMING
Performance |
| Timeline |
| Align Technology |
| PENN NATL GAMING |
Align Technology and PENN NATL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and PENN NATL
The main advantage of trading using opposite Align Technology and PENN NATL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, PENN NATL 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 PENN NATL will offset losses from the drop in PENN NATL's long position.| Align Technology vs. ANTA SPORTS PRODUCT | Align Technology vs. RCS MediaGroup SpA | Align Technology vs. Ares Management Corp | Align Technology vs. Platinum Investment Management |
| PENN NATL vs. ASM Pacific Technology | PENN NATL vs. Cognizant Technology Solutions | PENN NATL vs. Align Technology | PENN NATL vs. DXC Technology Co |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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