Correlation Between Alger Health and Aggressive Investors
Can any of the company-specific risk be diversified away by investing in both Alger Health and Aggressive Investors 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 Aggressive Investors 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 Aggressive Investors 1, you can compare the effects of market volatilities on Alger Health and Aggressive Investors 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 Aggressive Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Health and Aggressive Investors.
Diversification Opportunities for Alger Health and Aggressive Investors
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Alger and Aggressive is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Alger Health Sciences and Aggressive Investors 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aggressive Investors 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 Aggressive Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aggressive Investors has no effect on the direction of Alger Health i.e., Alger Health and Aggressive Investors go up and down completely randomly.
Pair Corralation between Alger Health and Aggressive Investors
Assuming the 90 days horizon Alger Health is expected to generate 4.26 times less return on investment than Aggressive Investors. But when comparing it to its historical volatility, Alger Health Sciences is 1.22 times less risky than Aggressive Investors. It trades about 0.05 of its potential returns per unit of risk. Aggressive Investors 1 is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 9,799 in Aggressive Investors 1 on October 23, 2024 and sell it today you would earn a total of 310.00 from holding Aggressive Investors 1 or generate 3.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Health Sciences vs. Aggressive Investors 1
Performance |
| Timeline |
| Alger Health Sciences |
| Aggressive Investors |
Alger Health and Aggressive Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Health and Aggressive Investors
The main advantage of trading using opposite Alger Health and Aggressive Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Health position performs unexpectedly, Aggressive Investors 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 Aggressive Investors will offset losses from the drop in Aggressive Investors' 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 |
| Aggressive Investors vs. Issachar Fund Class | Aggressive Investors vs. T Rowe Price | Aggressive Investors vs. Shelton Funds | Aggressive Investors vs. Rbc Funds Trust |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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