Correlation Between Baird Small/mid and Alger Health
Can any of the company-specific risk be diversified away by investing in both Baird Small/mid 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 Baird Small/mid and Alger Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baird Smallmid Cap and Alger Health Sciences, you can compare the effects of market volatilities on Baird Small/mid 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 Baird Small/mid with a short position of Alger Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Small/mid and Alger Health.
Diversification Opportunities for Baird Small/mid and Alger Health
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Baird and Alger is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Baird Smallmid 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 Baird Small/mid 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 Baird Smallmid 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 Baird Small/mid i.e., Baird Small/mid and Alger Health go up and down completely randomly.
Pair Corralation between Baird Small/mid and Alger Health
Assuming the 90 days horizon Baird Smallmid Cap is expected to generate 1.54 times more return on investment than Alger Health. However, Baird Small/mid is 1.54 times more volatile than Alger Health Sciences. It trades about 0.41 of its potential returns per unit of risk. Alger Health Sciences is currently generating about 0.14 per unit of risk. If you would invest 1,615 in Baird Smallmid Cap on September 1, 2024 and sell it today you would earn a total of 180.00 from holding Baird Smallmid Cap or generate 11.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Baird Smallmid Cap vs. Alger Health Sciences
Performance |
| Timeline |
| Baird Smallmid Cap |
| Alger Health Sciences |
Baird Small/mid and Alger Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baird Small/mid and Alger Health
The main advantage of trading using opposite Baird Small/mid and Alger Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Small/mid 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.| Baird Small/mid vs. Baird Aggregate Bond | Baird Small/mid vs. Baird Aggregate Bond | Baird Small/mid vs. Baird Short Term Bond | Baird Small/mid vs. Baird Short Term Bond |
| Alger Health vs. Rbc Microcap Value | Alger Health vs. Abr 7525 Volatility | Alger Health vs. Arrow Managed Futures | Alger Health vs. Fabxx |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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