Correlation Between Alger Health and Steward Small-mid
Can any of the company-specific risk be diversified away by investing in both Alger Health and Steward Small-mid 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 Steward Small-mid 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 Steward Small Mid Cap, you can compare the effects of market volatilities on Alger Health and Steward Small-mid 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 Steward Small-mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Health and Steward Small-mid.
Diversification Opportunities for Alger Health and Steward Small-mid
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alger and Steward is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Alger Health Sciences and Steward Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward Small Mid 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 Steward Small-mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward Small Mid has no effect on the direction of Alger Health i.e., Alger Health and Steward Small-mid go up and down completely randomly.
Pair Corralation between Alger Health and Steward Small-mid
Assuming the 90 days horizon Alger Health is expected to generate 6.73 times less return on investment than Steward Small-mid. But when comparing it to its historical volatility, Alger Health Sciences is 1.47 times less risky than Steward Small-mid. It trades about 0.03 of its potential returns per unit of risk. Steward Small Mid Cap is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,367 in Steward Small Mid Cap on August 29, 2024 and sell it today you would earn a total of 108.00 from holding Steward Small Mid Cap or generate 7.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Health Sciences vs. Steward Small Mid Cap
Performance |
| Timeline |
| Alger Health Sciences |
| Steward Small Mid |
Alger Health and Steward Small-mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Health and Steward Small-mid
The main advantage of trading using opposite Alger Health and Steward Small-mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Health position performs unexpectedly, Steward Small-mid 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 Steward Small-mid will offset losses from the drop in Steward Small-mid's long position.| Alger Health vs. Fidelity Advisor Technology | Alger Health vs. Fidelity Advisor Biotechnology | Alger Health vs. Fidelity Advisor Financial | Alger Health vs. Fidelity Advisor Utilities |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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