Correlation Between Absolute Convertible and Alger Emerging
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and Alger Emerging 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 Absolute Convertible and Alger Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Alger Emerging Markets, you can compare the effects of market volatilities on Absolute Convertible and Alger Emerging 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 Absolute Convertible with a short position of Alger Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Alger Emerging.
Diversification Opportunities for Absolute Convertible and Alger Emerging
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Absolute and Alger is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Alger Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Emerging Markets and Absolute Convertible 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 Absolute Convertible Arbitrage are associated (or correlated) with Alger Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Emerging Markets has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Alger Emerging go up and down completely randomly.
Pair Corralation between Absolute Convertible and Alger Emerging
Assuming the 90 days horizon Absolute Convertible is expected to generate 1.42 times less return on investment than Alger Emerging. But when comparing it to its historical volatility, Absolute Convertible Arbitrage is 17.66 times less risky than Alger Emerging. It trades about 0.59 of its potential returns per unit of risk. Alger Emerging Markets is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,065 in Alger Emerging Markets on December 29, 2024 and sell it today you would earn a total of 28.00 from holding Alger Emerging Markets or generate 2.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Absolute Convertible Arbitrage vs. Alger Emerging Markets
Performance |
Timeline |
Absolute Convertible |
Alger Emerging Markets |
Absolute Convertible and Alger Emerging Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Absolute Convertible and Alger Emerging
The main advantage of trading using opposite Absolute Convertible and Alger Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, Alger Emerging 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 Alger Emerging will offset losses from the drop in Alger Emerging's long position.Absolute Convertible vs. Metropolitan West High | Absolute Convertible vs. Gmo High Yield | Absolute Convertible vs. Aqr Risk Balanced Modities | Absolute Convertible vs. Transamerica High Yield |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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