Correlation Between Alger Health and Aristotle Funds
Can any of the company-specific risk be diversified away by investing in both Alger Health and Aristotle Funds 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 Aristotle Funds 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 Aristotle Funds Series, you can compare the effects of market volatilities on Alger Health and Aristotle Funds 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 Aristotle Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Health and Aristotle Funds.
Diversification Opportunities for Alger Health and Aristotle Funds
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Alger and Aristotle is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Alger Health Sciences and Aristotle Funds Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristotle Funds Series 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 Aristotle Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristotle Funds Series has no effect on the direction of Alger Health i.e., Alger Health and Aristotle Funds go up and down completely randomly.
Pair Corralation between Alger Health and Aristotle Funds
Assuming the 90 days horizon Alger Health Sciences is expected to under-perform the Aristotle Funds. But the mutual fund apears to be less risky and, when comparing its historical volatility, Alger Health Sciences is 1.25 times less risky than Aristotle Funds. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Aristotle Funds Series is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,404 in Aristotle Funds Series on September 13, 2024 and sell it today you would earn a total of 44.00 from holding Aristotle Funds Series or generate 3.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Health Sciences vs. Aristotle Funds Series
Performance |
| Timeline |
| Alger Health Sciences |
| Aristotle Funds Series |
Alger Health and Aristotle Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Health and Aristotle Funds
The main advantage of trading using opposite Alger Health and Aristotle Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Health position performs unexpectedly, Aristotle Funds 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 Aristotle Funds will offset losses from the drop in Aristotle Funds' long position.| Alger Health vs. Dana Large Cap | Alger Health vs. Pace Large Value | Alger Health vs. Qs Large Cap | Alger Health vs. Cb Large Cap |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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