Correlation Between Align Technology and NORWEGIAN AIR

Can any of the company-specific risk be diversified away by investing in both Align Technology and NORWEGIAN AIR 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 NORWEGIAN AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Align Technology and NORWEGIAN AIR SHUT, you can compare the effects of market volatilities on Align Technology and NORWEGIAN AIR 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 NORWEGIAN AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and NORWEGIAN AIR.

Diversification Opportunities for Align Technology and NORWEGIAN AIR

0.48

Correlation Coefficient

Align Technology  NORWEGIAN AIR

Very weak diversification

The 3 months correlation between Align and NORWEGIAN is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and NORWEGIAN AIR SHUT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORWEGIAN AIR SHUT 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 NORWEGIAN AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORWEGIAN AIR SHUT has no effect on the direction of Align Technology i.e., Align Technology and NORWEGIAN AIR go up and down completely randomly.

Pair Corralation between Align Technology and NORWEGIAN AIR

Assuming the 90 days horizon Align Technology is expected to generate 0.66 times more return on investment than NORWEGIAN AIR. However, Align Technology is 1.52 times less risky than NORWEGIAN AIR. It trades about -0.1 of its potential returns per unit of risk. NORWEGIAN AIR SHUT is currently generating about -0.07 per unit of risk. If you would invest  22,630  in Align Technology on September 28, 2024 and sell it today you would lose (2,755) from holding Align Technology or give up 12.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Align Technology  vs.  NORWEGIAN AIR SHUT

Align Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Align Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

NORWEGIAN AIR SHUT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NORWEGIAN AIR SHUT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Align Technology and NORWEGIAN AIR

The main advantage of trading using opposite Align Technology and NORWEGIAN AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, NORWEGIAN AIR 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 NORWEGIAN AIR will offset losses from the drop in NORWEGIAN AIR's long position.

The idea behind Align Technology and NORWEGIAN AIR SHUT pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.