Correlation Between Alger Health and Alger Concentrated
Can any of the company-specific risk be diversified away by investing in both Alger Health and Alger 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 Alger 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 Alger Concentrated Equity, you can compare the effects of market volatilities on Alger Health and Alger 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 Alger Concentrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Health and Alger Concentrated.
Diversification Opportunities for Alger Health and Alger Concentrated
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alger and Alger is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Alger Health Sciences and Alger Concentrated Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Concentrated Equity 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 Alger Concentrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Concentrated Equity has no effect on the direction of Alger Health i.e., Alger Health and Alger Concentrated go up and down completely randomly.
Pair Corralation between Alger Health and Alger Concentrated
Assuming the 90 days horizon Alger Health is expected to generate 11.04 times less return on investment than Alger Concentrated. But when comparing it to its historical volatility, Alger Health Sciences is 1.73 times less risky than Alger Concentrated. It trades about 0.04 of its potential returns per unit of risk. Alger Concentrated Equity is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,200 in Alger Concentrated Equity on August 24, 2024 and sell it today you would earn a total of 85.00 from holding Alger Concentrated Equity or generate 7.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Alger Health Sciences vs. Alger Concentrated Equity
Performance |
| Timeline |
| Alger Health Sciences |
| Alger Concentrated Equity |
Alger Health and Alger Concentrated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Health and Alger Concentrated
The main advantage of trading using opposite Alger Health and Alger Concentrated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Health position performs unexpectedly, Alger 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 Alger Concentrated will offset losses from the drop in Alger Concentrated's long position.| Alger Health vs. Aqr Large Cap | Alger Health vs. Siit Large Cap | Alger Health vs. Pace Large Growth | Alger Health vs. Quantitative U S |
| Alger Concentrated vs. Alger Midcap Growth | Alger Concentrated vs. Alger Midcap Growth | Alger Concentrated vs. Alger Mid Cap | Alger Concentrated vs. Alger Dynamic Opportunities |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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