Correlation Between Alger Health and Rising Dollar

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

Diversification Opportunities for Alger Health and Rising Dollar

-0.73

Correlation Coefficient

Alger Health  Rising Dollar

Pay attention - limited upside

The 3 months correlation between Alger and Rising is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Alger Health Sciences and Rising Dollar Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rising Dollar Profund 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 Rising Dollar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rising Dollar Profund has no effect on the direction of Alger Health i.e., Alger Health and Rising Dollar go up and down completely randomly.

Pair Corralation between Alger Health and Rising Dollar

Assuming the 90 days horizon Alger Health Sciences is expected to under-perform the Rising Dollar. In addition to that, Alger Health is 1.71 times more volatile than Rising Dollar Profund. It trades about -0.06 of its total potential returns per unit of risk. Rising Dollar Profund is currently generating about 0.17 per unit of volatility. If you would invest  2,986  in Rising Dollar Profund on October 24, 2024 and sell it today you would earn a total of  140.00  from holding Rising Dollar Profund or generate 4.69% return on investment over 90 days.

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

Alger Health Sciences  vs.  Rising Dollar Profund

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.

Rising Dollar Profund

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rising Dollar Profund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Rising Dollar 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 Rising Dollar

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

The idea behind Alger Health Sciences and Rising Dollar Profund 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..