Correlation Between Align Technology and Intel

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

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

Diversification Opportunities for Align Technology and Intel

0.02

Correlation Coefficient

Align Technology  Intel

Significant diversification

The 3 months correlation between Align and Intel is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of Align Technology i.e., Align Technology and Intel go up and down completely randomly.

Pair Corralation between Align Technology and Intel

Assuming the 90 days trading horizon Align Technology is expected to generate 0.49 times more return on investment than Intel. However, Align Technology is 2.04 times less risky than Intel. It trades about 0.31 of its potential returns per unit of risk. Intel is currently generating about 0.13 per unit of risk. If you would invest  31,230  in Align Technology on August 31, 2024 and sell it today you would earn a total of  3,624  from holding Align Technology or generate 11.6% return on investment over 90 days.

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

Align Technology  vs.  Intel

Align Technology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Align Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Align Technology may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Intel

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Intel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Align Technology and Intel

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

The idea behind Align Technology and Intel 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 Transaction History module to view history of all your transactions and understand their impact on performance.