Correlation Between Alger Health and Chartwell Small

Can any of the company-specific risk be diversified away by investing in both Alger Health and Chartwell Small 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 Chartwell Small 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 Chartwell Small Cap, you can compare the effects of market volatilities on Alger Health and Chartwell Small 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 Chartwell Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Health and Chartwell Small.

Diversification Opportunities for Alger Health and Chartwell Small

0.41

Correlation Coefficient

Alger Health  Chartwell Small

Very weak diversification

The 3 months correlation between Alger and Chartwell is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Alger Health Sciences and Chartwell Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chartwell Small Cap 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 Chartwell Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chartwell Small Cap has no effect on the direction of Alger Health i.e., Alger Health and Chartwell Small go up and down completely randomly.

Pair Corralation between Alger Health and Chartwell Small

Assuming the 90 days horizon Alger Health Sciences is expected to under-perform the Chartwell Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Alger Health Sciences is 1.51 times less risky than Chartwell Small. The mutual fund trades about 0.0 of its potential returns per unit of risk. The Chartwell Small Cap is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,124  in Chartwell Small Cap on October 4, 2024 and sell it today you would earn a total of  565.00  from holding Chartwell Small Cap or generate 50.27% return on investment over 90 days.

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

Alger Health Sciences  vs.  Chartwell Small Cap

Alger Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alger Health Sciences has generated negative risk-adjusted returns adding no value to fund investors. 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.

Chartwell Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chartwell Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Chartwell Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alger Health and Chartwell Small

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

The idea behind Alger Health Sciences and Chartwell Small Cap 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.