Correlation Between Alger Health and College Retirement
Can any of the company-specific risk be diversified away by investing in both Alger Health and College Retirement 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 College Retirement 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 College Retirement Equities, you can compare the effects of market volatilities on Alger Health and College Retirement 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 College Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Health and College Retirement.
Diversification Opportunities for Alger Health and College Retirement
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Alger and College is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Alger Health Sciences and College Retirement Equities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on College Retirement 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 College Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of College Retirement has no effect on the direction of Alger Health i.e., Alger Health and College Retirement go up and down completely randomly.
Pair Corralation between Alger Health and College Retirement
Assuming the 90 days horizon Alger Health is expected to generate 13.54 times less return on investment than College Retirement. In addition to that, Alger Health is 1.04 times more volatile than College Retirement Equities. It trades about 0.01 of its total potential returns per unit of risk. College Retirement Equities is currently generating about 0.11 per unit of volatility. If you would invest 33,999 in College Retirement Equities on October 16, 2024 and sell it today you would earn a total of 16,119 from holding College Retirement Equities or generate 47.41% 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. College Retirement Equities
Performance |
| Timeline |
| Alger Health Sciences |
| College Retirement |
Alger Health and College Retirement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Health and College Retirement
The main advantage of trading using opposite Alger Health and College Retirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Health position performs unexpectedly, College Retirement 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 College Retirement will offset losses from the drop in College Retirement's long position.| Alger Health vs. Firsthand Technology Opportunities | Alger Health vs. Janus Global Technology | Alger Health vs. Columbia Global Technology | Alger Health vs. Blackrock Science Technology |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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