Correlation Between Alger Health and Small Cap
Can any of the company-specific risk be diversified away by investing in both Alger Health and Small Cap 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 Small Cap 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 Small Cap Growth, you can compare the effects of market volatilities on Alger Health and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Health and Small Cap.
Diversification Opportunities for Alger Health and Small Cap
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Alger and Small is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Alger Health Sciences and Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Growth 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Growth has no effect on the direction of Alger Health i.e., Alger Health and Small Cap go up and down completely randomly.
Pair Corralation between Alger Health and Small Cap
Assuming the 90 days horizon Alger Health Sciences is expected to generate 0.76 times more return on investment than Small Cap. However, Alger Health Sciences is 1.31 times less risky than Small Cap. It trades about -0.09 of its potential returns per unit of risk. Small Cap Growth is currently generating about -0.16 per unit of risk. If you would invest 1,360 in Alger Health Sciences on September 12, 2024 and sell it today you would lose (21.00) from holding Alger Health Sciences or give up 1.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Health Sciences vs. Small Cap Growth
Performance |
| Timeline |
| Alger Health Sciences |
| Small Cap Growth |
Alger Health and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Health and Small Cap
The main advantage of trading using opposite Alger Health and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Health position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Alger Health vs. Siit Global Managed | Alger Health vs. Commonwealth Global Fund | Alger Health vs. Ab Global Real | Alger Health vs. Qs Global Equity |
| Small Cap vs. Wasatch Small Cap | Small Cap vs. Massmutual Premier Diversified | Small Cap vs. Small Cap Stock | Small Cap vs. Sentinel Small Pany |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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