Correlation Between Alger Health and Fidelity Advisor

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

Diversification Opportunities for Alger Health and Fidelity Advisor

-0.03

Correlation Coefficient

Alger Health  Fidelity Advisor

Good diversification

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

Pair Corralation between Alger Health and Fidelity Advisor

Assuming the 90 days horizon Alger Health is expected to generate 20.19 times less return on investment than Fidelity Advisor. But when comparing it to its historical volatility, Alger Health Sciences is 1.2 times less risky than Fidelity Advisor. It trades about 0.01 of its potential returns per unit of risk. Fidelity Advisor Mid is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2,323  in Fidelity Advisor Mid on September 4, 2024 and sell it today you would earn a total of  300.00  from holding Fidelity Advisor Mid or generate 12.91% return on investment over 90 days.

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

Alger Health Sciences  vs.  Fidelity Advisor Mid

Alger Health Sciences

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Health Sciences are ranked lower than 1 (%) 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.

Fidelity Advisor Mid

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Mid are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Advisor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Alger Health and Fidelity Advisor

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

The idea behind Alger Health Sciences and Fidelity Advisor Mid 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.