Correlation Between Align Technology and Jupiter Fund

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

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

Diversification Opportunities for Align Technology and Jupiter Fund

0.1

Correlation Coefficient

Align Technology  Jupiter Fund

Average diversification

The 3 months correlation between Align and Jupiter is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Jupiter Fund Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jupiter Fund Management 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 Jupiter Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jupiter Fund Management has no effect on the direction of Align Technology i.e., Align Technology and Jupiter Fund go up and down completely randomly.

Pair Corralation between Align Technology and Jupiter Fund

Assuming the 90 days horizon Align Technology is expected to generate 1.14 times more return on investment than Jupiter Fund. However, Align Technology is 1.14 times more volatile than Jupiter Fund Management. It trades about 0.0 of its potential returns per unit of risk. Jupiter Fund Management is currently generating about -0.02 per unit of risk. If you would invest  25,680  in Align Technology on October 23, 2024 and sell it today you would lose (3,900) from holding Align Technology or give up 15.19% of portfolio value over 90 days.

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

Align Technology  vs.  Jupiter Fund Management

Align Technology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Align Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Align Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Jupiter Fund Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jupiter Fund Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Align Technology and Jupiter Fund

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

The idea behind Align Technology and Jupiter Fund Management 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.