Correlation Between Alger Health and Foreign Value
Can any of the company-specific risk be diversified away by investing in both Alger Health and Foreign 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 Foreign 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 Foreign Value Fund, you can compare the effects of market volatilities on Alger Health and Foreign 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 Foreign Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Health and Foreign Value.
Diversification Opportunities for Alger Health and Foreign Value
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Alger and Foreign is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Alger Health Sciences and Foreign Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foreign 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 Foreign Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foreign Value has no effect on the direction of Alger Health i.e., Alger Health and Foreign Value go up and down completely randomly.
Pair Corralation between Alger Health and Foreign Value
Assuming the 90 days horizon Alger Health Sciences is expected to generate 1.1 times more return on investment than Foreign Value. However, Alger Health is 1.1 times more volatile than Foreign Value Fund. It trades about 0.09 of its potential returns per unit of risk. Foreign Value Fund is currently generating about -0.04 per unit of risk. If you would invest 1,344 in Alger Health Sciences on August 31, 2024 and sell it today you would earn a total of 21.00 from holding Alger Health Sciences or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Health Sciences vs. Foreign Value Fund
Performance |
| Timeline |
| Alger Health Sciences |
| Foreign Value |
Alger Health and Foreign Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Health and Foreign Value
The main advantage of trading using opposite Alger Health and Foreign Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Health position performs unexpectedly, Foreign 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 Foreign Value will offset losses from the drop in Foreign Value's long position.| Alger Health vs. Versatile Bond Portfolio | Alger Health vs. Multisector Bond Sma | Alger Health vs. Calamos Short Term Bond | Alger Health vs. Ambrus Core Bond |
| Foreign Value vs. Delaware Healthcare Fund | Foreign Value vs. Hartford Healthcare Hls | Foreign Value vs. Highland Longshort Healthcare | Foreign Value 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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