Correlation Between Align Technology and Fanuc

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

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

Diversification Opportunities for Align Technology and Fanuc

0.46

Correlation Coefficient

Align Technology  Fanuc

Very weak diversification

The 3 months correlation between Align and Fanuc is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Fanuc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fanuc 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 Fanuc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fanuc has no effect on the direction of Align Technology i.e., Align Technology and Fanuc go up and down completely randomly.

Pair Corralation between Align Technology and Fanuc

Assuming the 90 days horizon Align Technology is expected to under-perform the Fanuc. In addition to that, Align Technology is 1.53 times more volatile than Fanuc. It trades about -0.01 of its total potential returns per unit of risk. Fanuc is currently generating about 0.0 per unit of volatility. If you would invest  3,313  in Fanuc on October 26, 2024 and sell it today you would lose (379.00) from holding Fanuc or give up 11.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Align Technology  vs.  Fanuc

Align Technology

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Align Technology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Align Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Fanuc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fanuc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fanuc reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Align Technology and Fanuc

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

The idea behind Align Technology and Fanuc 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.