Correlation Between Alger Health and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Alger Health and Franklin Lifesmart 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 Lifesmart 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 Lifesmart 2025, you can compare the effects of market volatilities on Alger Health and Franklin Lifesmart 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 Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Health and Franklin Lifesmart.
Diversification Opportunities for Alger Health and Franklin Lifesmart
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Alger and FRANKLIN is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Alger Health Sciences and Franklin Lifesmart 2025 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart 2025 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 Lifesmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Lifesmart 2025 has no effect on the direction of Alger Health i.e., Alger Health and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Alger Health and Franklin Lifesmart
Assuming the 90 days horizon Alger Health is expected to generate 4.68 times less return on investment than Franklin Lifesmart. In addition to that, Alger Health is 1.74 times more volatile than Franklin Lifesmart 2025. It trades about 0.01 of its total potential returns per unit of risk. Franklin Lifesmart 2025 is currently generating about 0.09 per unit of volatility. If you would invest 1,066 in Franklin Lifesmart 2025 on August 30, 2024 and sell it today you would earn a total of 242.00 from holding Franklin Lifesmart 2025 or generate 22.7% 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. Franklin Lifesmart 2025
Performance |
| Timeline |
| Alger Health Sciences |
| Franklin Lifesmart 2025 |
Alger Health and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Health and Franklin Lifesmart
The main advantage of trading using opposite Alger Health and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Health position performs unexpectedly, Franklin Lifesmart 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 Lifesmart will offset losses from the drop in Franklin Lifesmart's long position.| Alger Health vs. Fidelity Advisor Technology | Alger Health vs. Fidelity Advisor Biotechnology | Alger Health vs. Fidelity Advisor Financial | Alger Health vs. Fidelity Advisor Utilities |
| Franklin Lifesmart vs. Prudential Health Sciences | Franklin Lifesmart vs. Baillie Gifford Health | Franklin Lifesmart vs. Hartford Healthcare Hls | Franklin Lifesmart 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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