Correlation Between Oak Harvest and Alger Midcap

Can any of the company-specific risk be diversified away by investing in both Oak Harvest and Alger Midcap 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 Oak Harvest and Alger Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Oak Harvest Longshrt and Alger Midcap Growth, you can compare the effects of market volatilities on Oak Harvest and Alger Midcap 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 Oak Harvest with a short position of Alger Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oak Harvest and Alger Midcap.

Diversification Opportunities for Oak Harvest and Alger Midcap

0.94

Correlation Coefficient

Oak Harvest  Alger Midcap

Almost no diversification

The 3 months correlation between Oak and Alger is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Oak Harvest Longshrt and Alger Midcap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Midcap Growth and Oak Harvest 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 Oak Harvest Longshrt are associated (or correlated) with Alger Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Midcap Growth has no effect on the direction of Oak Harvest i.e., Oak Harvest and Alger Midcap go up and down completely randomly.

Pair Corralation between Oak Harvest and Alger Midcap

Assuming the 90 days horizon Oak Harvest Longshrt is expected to generate 0.41 times more return on investment than Alger Midcap. However, Oak Harvest Longshrt is 2.42 times less risky than Alger Midcap. It trades about 0.03 of its potential returns per unit of risk. Alger Midcap Growth is currently generating about -0.16 per unit of risk. If you would invest  1,145  in Oak Harvest Longshrt on September 27, 2024 and sell it today you would earn a total of  4.00  from holding Oak Harvest Longshrt or generate 0.35% return on investment over 90 days.

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

Oak Harvest Longshrt  vs.  Alger Midcap Growth

Oak Harvest Longshrt

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oak Harvest Longshrt are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Oak Harvest is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alger Midcap Growth

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Midcap Growth are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Alger Midcap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Oak Harvest and Alger Midcap

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

The idea behind Oak Harvest Longshrt and Alger Midcap Growth 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.