Correlation Between Align Technology and Goldman Sachs

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

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

Diversification Opportunities for Align Technology and Goldman Sachs

0.63

Correlation Coefficient

Align Technology  Goldman Sachs

Poor diversification

The 3 months correlation between Align and Goldman is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and The Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs has no effect on the direction of Align Technology i.e., Align Technology and Goldman Sachs go up and down completely randomly.

Pair Corralation between Align Technology and Goldman Sachs

Assuming the 90 days horizon Align Technology is expected to under-perform the Goldman Sachs. In addition to that, Align Technology is 1.0 times more volatile than The Goldman Sachs. It trades about -0.17 of its total potential returns per unit of risk. The Goldman Sachs is currently generating about -0.02 per unit of volatility. If you would invest  54,376  in The Goldman Sachs on December 23, 2024 and sell it today you would lose (2,516) from holding The Goldman Sachs or give up 4.63% of portfolio value over 90 days.

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

Align Technology  vs.  The Goldman Sachs

Align Technology

Risk-Adjusted Performance

Very Weak

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

Goldman Sachs

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Goldman Sachs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Goldman Sachs is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Align Technology and Goldman Sachs

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

The idea behind Align Technology and The Goldman Sachs 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.