Correlation Between Alger Health and Bright Rock
Can any of the company-specific risk be diversified away by investing in both Alger Health and Bright Rock 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 Bright Rock 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 Bright Rock Quality, you can compare the effects of market volatilities on Alger Health and Bright Rock 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 Bright Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Health and Bright Rock.
Diversification Opportunities for Alger Health and Bright Rock
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alger and Bright is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Alger Health Sciences and Bright Rock Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Rock Quality 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 Bright Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Rock Quality has no effect on the direction of Alger Health i.e., Alger Health and Bright Rock go up and down completely randomly.
Pair Corralation between Alger Health and Bright Rock
Assuming the 90 days horizon Alger Health Sciences is expected to under-perform the Bright Rock. In addition to that, Alger Health is 1.1 times more volatile than Bright Rock Quality. It trades about 0.0 of its total potential returns per unit of risk. Bright Rock Quality is currently generating about 0.06 per unit of volatility. If you would invest 1,830 in Bright Rock Quality on October 23, 2024 and sell it today you would earn a total of 410.00 from holding Bright Rock Quality or generate 22.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Health Sciences vs. Bright Rock Quality
Performance |
| Timeline |
| Alger Health Sciences |
| Bright Rock Quality |
Alger Health and Bright Rock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Health and Bright Rock
The main advantage of trading using opposite Alger Health and Bright Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Health position performs unexpectedly, Bright Rock 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 Bright Rock will offset losses from the drop in Bright Rock's long position.| Alger Health vs. Investec Global Franchise | Alger Health vs. Legg Mason Global | Alger Health vs. Gmo Global Equity | Alger Health vs. Dreyfusstandish Global Fixed |
| Bright Rock vs. Commodities Strategy Fund | Bright Rock vs. Ultranasdaq 100 Profund Ultranasdaq 100 | Bright Rock vs. Issachar Fund Class | Bright Rock vs. Qs Large Cap |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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