Correlation Between Hartford Healthcare and Alger Global
Can any of the company-specific risk be diversified away by investing in both Hartford Healthcare and Alger Global 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 Hartford Healthcare and Alger Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hartford Healthcare Hls and Alger Global Growth, you can compare the effects of market volatilities on Hartford Healthcare and Alger Global 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 Hartford Healthcare with a short position of Alger Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Healthcare and Alger Global.
Diversification Opportunities for Hartford Healthcare and Alger Global
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hartford and Alger is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Healthcare Hls and Alger Global Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Global Growth and Hartford Healthcare 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 Hartford Healthcare Hls are associated (or correlated) with Alger Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Global Growth has no effect on the direction of Hartford Healthcare i.e., Hartford Healthcare and Alger Global go up and down completely randomly.
Pair Corralation between Hartford Healthcare and Alger Global
Assuming the 90 days horizon Hartford Healthcare is expected to generate 6.04 times less return on investment than Alger Global. But when comparing it to its historical volatility, Hartford Healthcare Hls is 1.26 times less risky than Alger Global. It trades about 0.02 of its potential returns per unit of risk. Alger Global Growth is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,716 in Alger Global Growth on August 29, 2024 and sell it today you would earn a total of 281.00 from holding Alger Global Growth or generate 10.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hartford Healthcare Hls vs. Alger Global Growth
Performance |
| Timeline |
| Hartford Healthcare Hls |
| Alger Global Growth |
Hartford Healthcare and Alger Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hartford Healthcare and Alger Global
The main advantage of trading using opposite Hartford Healthcare and Alger Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Healthcare position performs unexpectedly, Alger Global 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 Global will offset losses from the drop in Alger Global's long position.The idea behind Hartford Healthcare Hls and Alger Global Growth pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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