Correlation Between Alger Health and Great West
Can any of the company-specific risk be diversified away by investing in both Alger Health and Great West 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 Great West 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 Great West Goldman Sachs, you can compare the effects of market volatilities on Alger Health and Great West 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 Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Health and Great West.
Diversification Opportunities for Alger Health and Great West
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Alger and Great is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Alger Health Sciences and Great West Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Goldman 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 Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Goldman has no effect on the direction of Alger Health i.e., Alger Health and Great West go up and down completely randomly.
Pair Corralation between Alger Health and Great West
Assuming the 90 days horizon Alger Health is expected to generate 2.05 times less return on investment than Great West. But when comparing it to its historical volatility, Alger Health Sciences is 5.89 times less risky than Great West. It trades about 0.05 of its potential returns per unit of risk. Great West Goldman Sachs is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 857.00 in Great West Goldman Sachs on October 22, 2024 and sell it today you would lose (2.00) from holding Great West Goldman Sachs or give up 0.23% 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. Great West Goldman Sachs
Performance |
| Timeline |
| Alger Health Sciences |
| Great West Goldman |
Alger Health and Great West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Health and Great West
The main advantage of trading using opposite Alger Health and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Health position performs unexpectedly, Great West 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 Great West will offset losses from the drop in Great West's long position.| Alger Health vs. Nasdaq 100 Profund Nasdaq 100 | Alger Health vs. Lord Abbett Diversified | Alger Health vs. Issachar Fund Class | Alger Health vs. Rational Strategic Allocation |
| Great West vs. Prudential Health Sciences | Great West vs. Deutsche Health And | Great West vs. Baillie Gifford Health | Great West 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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