Correlation Between TransMedics and Align Technology
Can any of the company-specific risk be diversified away by investing in both TransMedics 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 TransMedics and Align Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TransMedics Group and Align Technology, you can compare the effects of market volatilities on TransMedics 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 TransMedics with a short position of Align Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of TransMedics and Align Technology.
Diversification Opportunities for TransMedics and Align Technology
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TransMedics and Align is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding TransMedics Group and Align Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Align Technology and TransMedics 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 TransMedics Group 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 TransMedics i.e., TransMedics and Align Technology go up and down completely randomly.
Pair Corralation between TransMedics and Align Technology
Given the investment horizon of 90 days TransMedics Group is expected to under-perform the Align Technology. In addition to that, TransMedics is 2.59 times more volatile than Align Technology. It trades about -0.23 of its total potential returns per unit of risk. Align Technology is currently generating about 0.1 per unit of volatility. If you would invest 21,580 in Align Technology on August 28, 2024 and sell it today you would earn a total of 1,213 from holding Align Technology or generate 5.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TransMedics Group vs. Align Technology
Performance |
| Timeline |
| TransMedics Group |
| Align Technology |
TransMedics and Align Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TransMedics and Align Technology
The main advantage of trading using opposite TransMedics and Align Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TransMedics 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.| TransMedics vs. Inspire Medical Systems | TransMedics vs. Inari Medical | TransMedics vs. InMode | TransMedics vs. Insulet |
| Align Technology vs. Insulet | Align Technology vs. Tandem Diabetes Care | Align Technology vs. Abbott Laboratories | Align Technology vs. Stryker |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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