Correlation Between Alger Small and Alger Health
Can any of the company-specific risk be diversified away by investing in both Alger Small and Alger Health 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 Small and Alger Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alger Small Cap and Alger Health Sciences, you can compare the effects of market volatilities on Alger Small and Alger Health 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 Small with a short position of Alger Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Small and Alger Health.
Diversification Opportunities for Alger Small and Alger Health
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alger and Alger is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Alger Small Cap and Alger Health Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Health Sciences and Alger Small 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 Small Cap are associated (or correlated) with Alger Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Health Sciences has no effect on the direction of Alger Small i.e., Alger Small and Alger Health go up and down completely randomly.
Pair Corralation between Alger Small and Alger Health
Assuming the 90 days horizon Alger Small Cap is expected to generate 1.87 times more return on investment than Alger Health. However, Alger Small is 1.87 times more volatile than Alger Health Sciences. It trades about 0.21 of its potential returns per unit of risk. Alger Health Sciences is currently generating about 0.05 per unit of risk. If you would invest 1,953 in Alger Small Cap on August 31, 2024 and sell it today you would earn a total of 280.00 from holding Alger Small Cap or generate 14.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Small Cap vs. Alger Health Sciences
Performance |
| Timeline |
| Alger Small Cap |
| Alger Health Sciences |
Alger Small and Alger Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Small and Alger Health
The main advantage of trading using opposite Alger Small and Alger Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Small position performs unexpectedly, Alger Health 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 Alger Health will offset losses from the drop in Alger Health's long position.| Alger Small vs. Prudential Government Money | Alger Small vs. Jpmorgan Trust I | Alger Small vs. American Century Investment | Alger Small vs. Dreyfus Institutional Reserves |
| Alger Health vs. Vy T Rowe | Alger Health vs. Eaton Vance Atlanta | Alger Health vs. Blackrock Health Sciences | Alger Health vs. Blackrock 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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