Correlation Between Alger Health and Thornburg Value
Can any of the company-specific risk be diversified away by investing in both Alger Health and Thornburg Value 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 Thornburg Value 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 Thornburg Value Fund, you can compare the effects of market volatilities on Alger Health and Thornburg Value 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 Thornburg Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Health and Thornburg Value.
Diversification Opportunities for Alger Health and Thornburg Value
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alger and Thornburg is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Alger Health Sciences and Thornburg Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Value 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 Thornburg Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Value has no effect on the direction of Alger Health i.e., Alger Health and Thornburg Value go up and down completely randomly.
Pair Corralation between Alger Health and Thornburg Value
Assuming the 90 days horizon Alger Health Sciences is expected to under-perform the Thornburg Value. But the mutual fund apears to be less risky and, when comparing its historical volatility, Alger Health Sciences is 1.44 times less risky than Thornburg Value. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Thornburg Value Fund is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 6,213 in Thornburg Value Fund on January 13, 2025 and sell it today you would earn a total of 677.00 from holding Thornburg Value Fund or generate 10.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Health Sciences vs. Thornburg Value Fund
Performance |
| Timeline |
| Alger Health Sciences |
| Thornburg Value |
Alger Health and Thornburg Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Health and Thornburg Value
The main advantage of trading using opposite Alger Health and Thornburg Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Health position performs unexpectedly, Thornburg Value 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 Thornburg Value will offset losses from the drop in Thornburg Value's long position.| Alger Health vs. Alger Midcap Growth | Alger Health vs. Alger Midcap Growth | Alger Health vs. Alger Mid Cap | Alger Health vs. Alger Small Cap |
| Thornburg Value vs. Thornburg Value Fund | Thornburg Value vs. Thornburg International Value | Thornburg Value vs. Thornburg International Value | Thornburg Value vs. Thornburg International Value |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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