Correlation Between Alger Health and Global Concentrated
Can any of the company-specific risk be diversified away by investing in both Alger Health and Global Concentrated 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 Global Concentrated 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 Global Centrated Portfolio, you can compare the effects of market volatilities on Alger Health and Global Concentrated 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 Global Concentrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Health and Global Concentrated.
Diversification Opportunities for Alger Health and Global Concentrated
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alger and Global is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Alger Health Sciences and Global Centrated Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Centrated Por 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 Global Concentrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Centrated Por has no effect on the direction of Alger Health i.e., Alger Health and Global Concentrated go up and down completely randomly.
Pair Corralation between Alger Health and Global Concentrated
Assuming the 90 days horizon Alger Health Sciences is expected to under-perform the Global Concentrated. But the mutual fund apears to be less risky and, when comparing its historical volatility, Alger Health Sciences is 1.01 times less risky than Global Concentrated. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Global Centrated Portfolio is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,287 in Global Centrated Portfolio on October 7, 2024 and sell it today you would earn a total of 58.00 from holding Global Centrated Portfolio or generate 2.54% 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. Global Centrated Portfolio
Performance |
Timeline |
Alger Health Sciences |
Global Centrated Por |
Alger Health and Global Concentrated Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alger Health and Global Concentrated
The main advantage of trading using opposite Alger Health and Global Concentrated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Health position performs unexpectedly, Global Concentrated 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 Global Concentrated will offset losses from the drop in Global Concentrated's long position.Alger Health vs. Blackstone Secured Lending | Alger Health vs. Mesirow Financial Small | Alger Health vs. Goldman Sachs Financial | Alger Health vs. Angel Oak Financial |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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