Correlation Between Alger Health and Franklin Strategic
Can any of the company-specific risk be diversified away by investing in both Alger Health and Franklin Strategic 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 Franklin Strategic 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 Franklin Strategic Income, you can compare the effects of market volatilities on Alger Health and Franklin Strategic 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 Franklin Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Health and Franklin Strategic.
Diversification Opportunities for Alger Health and Franklin Strategic
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alger and Franklin is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Alger Health Sciences and Franklin Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Strategic Income 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 Franklin Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Strategic Income has no effect on the direction of Alger Health i.e., Alger Health and Franklin Strategic go up and down completely randomly.
Pair Corralation between Alger Health and Franklin Strategic
Assuming the 90 days horizon Alger Health Sciences is expected to under-perform the Franklin Strategic. In addition to that, Alger Health is 2.69 times more volatile than Franklin Strategic Income. It trades about -0.02 of its total potential returns per unit of risk. Franklin Strategic Income is currently generating about -0.04 per unit of volatility. If you would invest 825.00 in Franklin Strategic Income on October 26, 2024 and sell it today you would lose (6.00) from holding Franklin Strategic Income or give up 0.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Health Sciences vs. Franklin Strategic Income
Performance |
| Timeline |
| Alger Health Sciences |
| Franklin Strategic Income |
Alger Health and Franklin Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Health and Franklin Strategic
The main advantage of trading using opposite Alger Health and Franklin Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Health position performs unexpectedly, Franklin Strategic 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 Franklin Strategic will offset losses from the drop in Franklin Strategic's long position.| Alger Health vs. Aqr Global Macro | Alger Health vs. Investec Global Franchise | Alger Health vs. Dreyfusstandish Global Fixed | Alger Health vs. Kinetics Global Fund |
| Franklin Strategic vs. Fidelity Advisor Health | Franklin Strategic vs. Hartford Healthcare Hls | Franklin Strategic vs. Baron Health Care | Franklin Strategic vs. Alger Health Sciences |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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