Correlation Between Hexcel and Align Technology
Can any of the company-specific risk be diversified away by investing in both Hexcel and Align Technology 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 Hexcel and Align Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hexcel and Align Technology, you can compare the effects of market volatilities on Hexcel and Align Technology 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 Hexcel with a short position of Align Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hexcel and Align Technology.
Diversification Opportunities for Hexcel and Align Technology
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hexcel and Align is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Hexcel and Align Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Align Technology and Hexcel 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 Hexcel are associated (or correlated) with Align Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Align Technology has no effect on the direction of Hexcel i.e., Hexcel and Align Technology go up and down completely randomly.
Pair Corralation between Hexcel and Align Technology
Assuming the 90 days horizon Hexcel is expected to generate 2.29 times less return on investment than Align Technology. But when comparing it to its historical volatility, Hexcel is 1.08 times less risky than Align Technology. It trades about 0.16 of its potential returns per unit of risk. Align Technology is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 20,280 in Align Technology on September 14, 2024 and sell it today you would earn a total of 2,560 from holding Align Technology or generate 12.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hexcel vs. Align Technology
Performance |
| Timeline |
| Hexcel |
| Align Technology |
Hexcel and Align Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hexcel and Align Technology
The main advantage of trading using opposite Hexcel and Align Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hexcel position performs unexpectedly, Align Technology 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 Align Technology will offset losses from the drop in Align Technology's long position.| Hexcel vs. Align Technology | Hexcel vs. Micron Technology | Hexcel vs. Vishay Intertechnology | Hexcel vs. PLAYSTUDIOS A DL 0001 |
| Align Technology vs. Superior Plus Corp | Align Technology vs. SIVERS SEMICONDUCTORS AB | Align Technology vs. Norsk Hydro ASA | Align Technology vs. Reliance Steel Aluminum |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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