Correlation Between Aqr Small and Alger Health
Can any of the company-specific risk be diversified away by investing in both Aqr 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 Aqr 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 Aqr Small Cap and Alger Health Sciences, you can compare the effects of market volatilities on Aqr 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 Aqr Small with a short position of Alger Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Small and Alger Health.
Diversification Opportunities for Aqr Small and Alger Health
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aqr and Alger is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Aqr 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 Aqr 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 Aqr 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 Aqr Small i.e., Aqr Small and Alger Health go up and down completely randomly.
Pair Corralation between Aqr Small and Alger Health
Assuming the 90 days horizon Aqr Small Cap is expected to under-perform the Alger Health. In addition to that, Aqr Small is 1.43 times more volatile than Alger Health Sciences. It trades about -0.16 of its total potential returns per unit of risk. Alger Health Sciences is currently generating about -0.09 per unit of volatility. If you would invest 1,360 in Alger Health Sciences on September 12, 2024 and sell it today you would lose (21.00) from holding Alger Health Sciences or give up 1.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aqr Small Cap vs. Alger Health Sciences
Performance |
| Timeline |
| Aqr Small Cap |
| Alger Health Sciences |
Aqr Small and Alger Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Small and Alger Health
The main advantage of trading using opposite Aqr Small and Alger Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr 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.| Aqr Small vs. Vanguard Health Care | Aqr Small vs. Hartford Healthcare Hls | Aqr Small vs. Delaware Healthcare Fund | Aqr Small vs. Eventide Healthcare Life |
| Alger Health vs. Siit Global Managed | Alger Health vs. Commonwealth Global Fund | Alger Health vs. Ab Global Real | Alger Health vs. Qs Global Equity |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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