Correlation Between Align Technology and Cross Country
Can any of the company-specific risk be diversified away by investing in both Align Technology and Cross Country 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 Cross Country into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and Cross Country Healthcare, you can compare the effects of market volatilities on Align Technology and Cross Country 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 Cross Country. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and Cross Country.
Diversification Opportunities for Align Technology and Cross Country
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Align and Cross is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Cross Country Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cross Country Healthcare 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 Cross Country. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cross Country Healthcare has no effect on the direction of Align Technology i.e., Align Technology and Cross Country go up and down completely randomly.
Pair Corralation between Align Technology and Cross Country
Assuming the 90 days horizon Align Technology is expected to generate 0.35 times more return on investment than Cross Country. However, Align Technology is 2.9 times less risky than Cross Country. It trades about 0.41 of its potential returns per unit of risk. Cross Country Healthcare is currently generating about -0.01 per unit of risk. If you would invest 19,150 in Align Technology on September 2, 2024 and sell it today you would earn a total of 2,790 from holding Align Technology or generate 14.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Align Technology vs. Cross Country Healthcare
Performance |
| Timeline |
| Align Technology |
| Cross Country Healthcare |
Align Technology and Cross Country Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and Cross Country
The main advantage of trading using opposite Align Technology and Cross Country positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, Cross Country 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 Cross Country will offset losses from the drop in Cross Country's long position.| Align Technology vs. G8 EDUCATION | Align Technology vs. Hitachi Construction Machinery | Align Technology vs. IDP EDUCATION LTD | Align Technology vs. Penta Ocean Construction Co |
| Cross Country vs. SMA Solar Technology | Cross Country vs. Align Technology | Cross Country vs. Micron Technology | Cross Country vs. Transportadora de Gas |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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