Correlation Between Alger Health and The Hartford
Can any of the company-specific risk be diversified away by investing in both Alger Health and The Hartford 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 The Hartford 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 The Hartford Healthcare, you can compare the effects of market volatilities on Alger Health and The Hartford 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 The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Health and The Hartford.
Diversification Opportunities for Alger Health and The Hartford
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alger and The is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Alger Health Sciences and The Hartford Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hartford Healthcare 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 The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Hartford Healthcare has no effect on the direction of Alger Health i.e., Alger Health and The Hartford go up and down completely randomly.
Pair Corralation between Alger Health and The Hartford
Assuming the 90 days horizon Alger Health Sciences is expected to generate 0.96 times more return on investment than The Hartford. However, Alger Health Sciences is 1.04 times less risky than The Hartford. It trades about 0.03 of its potential returns per unit of risk. The Hartford Healthcare is currently generating about 0.03 per unit of risk. If you would invest 1,333 in Alger Health Sciences on September 3, 2024 and sell it today you would earn a total of 37.00 from holding Alger Health Sciences or generate 2.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Health Sciences vs. The Hartford Healthcare
Performance |
| Timeline |
| Alger Health Sciences |
| The Hartford Healthcare |
Alger Health and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Health and The Hartford
The main advantage of trading using opposite Alger Health and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Health position performs unexpectedly, The Hartford 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 The Hartford will offset losses from the drop in The Hartford's long position.| Alger Health vs. Vanguard Health Care | Alger Health vs. Vanguard Health Care | Alger Health vs. T Rowe Price | Alger Health vs. T Rowe Price |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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