Correlation Between Alger Health and Alger Spectra
Can any of the company-specific risk be diversified away by investing in both Alger Health and Alger Spectra 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 Spectra 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 Spectra, you can compare the effects of market volatilities on Alger Health and Alger Spectra 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 Spectra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Health and Alger Spectra.
Diversification Opportunities for Alger Health and Alger Spectra
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alger and Alger is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Alger Health Sciences and Alger Spectra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Spectra 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 Spectra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Spectra has no effect on the direction of Alger Health i.e., Alger Health and Alger Spectra go up and down completely randomly.
Pair Corralation between Alger Health and Alger Spectra
Assuming the 90 days horizon Alger Health is expected to generate 3.51 times less return on investment than Alger Spectra. But when comparing it to its historical volatility, Alger Health Sciences is 1.67 times less risky than Alger Spectra. It trades about 0.09 of its potential returns per unit of risk. Alger Spectra is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 3,049 in Alger Spectra on August 31, 2024 and sell it today you would earn a total of 172.00 from holding Alger Spectra or generate 5.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Health Sciences vs. Alger Spectra
Performance |
| Timeline |
| Alger Health Sciences |
| Alger Spectra |
Alger Health and Alger Spectra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Health and Alger Spectra
The main advantage of trading using opposite Alger Health and Alger Spectra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Health position performs unexpectedly, Alger Spectra 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 Spectra will offset losses from the drop in Alger Spectra's long position.| Alger Health vs. Versatile Bond Portfolio | Alger Health vs. Multisector Bond Sma | Alger Health vs. Calamos Short Term Bond | Alger Health vs. Ambrus Core Bond |
| Alger Spectra vs. American Century High | Alger Spectra vs. Dunham High Yield | Alger Spectra vs. Valic Company I | Alger Spectra vs. Virtus High Yield |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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