Correlation Between Align Technology and Ita Unibanco

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

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

Diversification Opportunities for Align Technology and Ita Unibanco

0.32

Correlation Coefficient

Align Technology  Ita Unibanco

Weak diversification

The 3 months correlation between Align and Ita is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Ita Unibanco Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ita Unibanco Holding 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 Ita Unibanco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ita Unibanco Holding has no effect on the direction of Align Technology i.e., Align Technology and Ita Unibanco go up and down completely randomly.

Pair Corralation between Align Technology and Ita Unibanco

Assuming the 90 days trading horizon Align Technology is expected to generate 1.08 times more return on investment than Ita Unibanco. However, Align Technology is 1.08 times more volatile than Ita Unibanco Holding. It trades about 0.14 of its potential returns per unit of risk. Ita Unibanco Holding is currently generating about 0.08 per unit of risk. If you would invest  25,032  in Align Technology on April 20, 2025 and sell it today you would earn a total of  3,092  from holding Align Technology or generate 12.35% return on investment over 90 days.

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

Align Technology  vs.  Ita Unibanco Holding

Align Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Align Technology are ranked lower than 10 (%) 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 August 2025.

Ita Unibanco Holding

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ita Unibanco Holding are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ita Unibanco may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Align Technology and Ita Unibanco

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

The idea behind Align Technology and Ita Unibanco Holding 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.