Correlation Between Alger Health and Pro Blend
Can any of the company-specific risk be diversified away by investing in both Alger Health and Pro Blend 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 Pro Blend 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 Pro Blend Extended Term, you can compare the effects of market volatilities on Alger Health and Pro Blend 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 Pro Blend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Health and Pro Blend.
Diversification Opportunities for Alger Health and Pro Blend
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Alger and Pro is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Alger Health Sciences and Pro Blend Extended Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro Blend Extended 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 Pro Blend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro Blend Extended has no effect on the direction of Alger Health i.e., Alger Health and Pro Blend go up and down completely randomly.
Pair Corralation between Alger Health and Pro Blend
Assuming the 90 days horizon Alger Health is expected to generate 3.36 times less return on investment than Pro Blend. In addition to that, Alger Health is 1.93 times more volatile than Pro Blend Extended Term. It trades about 0.01 of its total potential returns per unit of risk. Pro Blend Extended Term is currently generating about 0.09 per unit of volatility. If you would invest 1,670 in Pro Blend Extended Term on August 27, 2024 and sell it today you would earn a total of 362.00 from holding Pro Blend Extended Term or generate 21.68% 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. Pro Blend Extended Term
Performance |
| Timeline |
| Alger Health Sciences |
| Pro Blend Extended |
Alger Health and Pro Blend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Health and Pro Blend
The main advantage of trading using opposite Alger Health and Pro Blend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Health position performs unexpectedly, Pro Blend 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 Pro Blend will offset losses from the drop in Pro Blend's long position.| Alger Health vs. Harbor Vertible Securities | Alger Health vs. Franklin Vertible Securities | Alger Health vs. Absolute Convertible Arbitrage | Alger Health vs. Teton Vertible Securities |
| Pro Blend vs. Tekla Healthcare Opportunities | Pro Blend vs. The Gabelli Healthcare | Pro Blend vs. Live Oak Health | Pro Blend 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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