Correlation Between Alger Health and Baillie Gifford

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

By analyzing existing cross correlation between Alger Health Sciences and Baillie Gifford Emerging, you can compare the effects of market volatilities on Alger Health and Baillie Gifford 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 Alger Health with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Health and Baillie Gifford.

Diversification Opportunities for Alger Health and Baillie Gifford

0.03

Correlation Coefficient

Alger Health  Baillie Gifford

Significant diversification

The 3 months correlation between Alger and Baillie is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Alger Health Sciences and Baillie Gifford Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford Emerging and Alger Health 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 Alger Health Sciences are associated (or correlated) with Baillie Gifford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baillie Gifford Emerging has no effect on the direction of Alger Health i.e., Alger Health and Baillie Gifford go up and down completely randomly.

Pair Corralation between Alger Health and Baillie Gifford

Assuming the 90 days horizon Alger Health is expected to generate 1.46 times less return on investment than Baillie Gifford. But when comparing it to its historical volatility, Alger Health Sciences is 1.41 times less risky than Baillie Gifford. It trades about 0.07 of its potential returns per unit of risk. Baillie Gifford Emerging is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  903.00  in Baillie Gifford Emerging on September 5, 2024 and sell it today you would earn a total of  51.00  from holding Baillie Gifford Emerging or generate 5.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.82%
Values	Daily Returns

Alger Health Sciences  vs.  Baillie Gifford Emerging

Alger Health Sciences

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Health Sciences are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Alger Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Baillie Gifford Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baillie Gifford Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Baillie Gifford is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alger Health and Baillie Gifford

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

The idea behind Alger Health Sciences and Baillie Gifford Emerging 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.