Correlation Between Absolute Convertible and Alger Health
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible 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 Absolute Convertible and Alger Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Alger Health Sciences, you can compare the effects of market volatilities on Absolute Convertible 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 Absolute Convertible with a short position of Alger Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Alger Health.
Diversification Opportunities for Absolute Convertible and Alger Health
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Absolute and Alger is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage 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 Absolute Convertible 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 Absolute Convertible Arbitrage 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 Absolute Convertible i.e., Absolute Convertible and Alger Health go up and down completely randomly.
Pair Corralation between Absolute Convertible and Alger Health
Assuming the 90 days horizon Absolute Convertible Arbitrage is expected to generate 0.12 times more return on investment than Alger Health. However, Absolute Convertible Arbitrage is 8.05 times less risky than Alger Health. It trades about 0.19 of its potential returns per unit of risk. Alger Health Sciences is currently generating about 0.01 per unit of risk. If you would invest 1,037 in Absolute Convertible Arbitrage on August 27, 2024 and sell it today you would earn a total of 111.00 from holding Absolute Convertible Arbitrage or generate 10.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Alger Health Sciences
Performance |
| Timeline |
| Absolute Convertible |
| Alger Health Sciences |
Absolute Convertible and Alger Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Alger Health
The main advantage of trading using opposite Absolute Convertible and Alger Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible 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.| Absolute Convertible vs. Absolute Capital Opportunities | Absolute Convertible vs. Invesco Small Cap | Absolute Convertible vs. Vanguard 500 Index | Absolute Convertible vs. Rivernorth Opportunities |
| Alger Health vs. Harbor Vertible Securities | Alger Health vs. Franklin Vertible Securities | Alger Health vs. Absolute Convertible Arbitrage | Alger Health vs. Teton Vertible Securities |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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