Correlation Between Alger Health and Small-cap Profund
Can any of the company-specific risk be diversified away by investing in both Alger Health and Small-cap Profund 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 Profund 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 Profund Small Cap, you can compare the effects of market volatilities on Alger Health and Small-cap Profund 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 Profund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Health and Small-cap Profund.
Diversification Opportunities for Alger Health and Small-cap Profund
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alger and Small-cap is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Alger Health Sciences and Small Cap Profund Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Profund 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 Profund. 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 Profund has no effect on the direction of Alger Health i.e., Alger Health and Small-cap Profund go up and down completely randomly.
Pair Corralation between Alger Health and Small-cap Profund
Assuming the 90 days horizon Alger Health is expected to generate 6.16 times less return on investment than Small-cap Profund. But when comparing it to its historical volatility, Alger Health Sciences is 2.14 times less risky than Small-cap Profund. It trades about 0.08 of its potential returns per unit of risk. Small Cap Profund Small Cap is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 11,509 in Small Cap Profund Small Cap on August 27, 2024 and sell it today you would earn a total of 1,005 from holding Small Cap Profund Small Cap or generate 8.73% 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. Small Cap Profund Small Cap
Performance |
| Timeline |
| Alger Health Sciences |
| Small Cap Profund |
Alger Health and Small-cap Profund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Health and Small-cap Profund
The main advantage of trading using opposite Alger Health and Small-cap Profund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Health position performs unexpectedly, Small-cap Profund 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 Profund will offset losses from the drop in Small-cap Profund'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 |
| Small-cap Profund vs. Baillie Gifford Health | Small-cap Profund vs. Tekla Healthcare Opportunities | Small-cap Profund vs. Delaware Healthcare Fund | Small-cap Profund 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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