Correlation Between Federated Kaufmann and Alger Health
Can any of the company-specific risk be diversified away by investing in both Federated Kaufmann 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 Federated Kaufmann and Alger Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Kaufmann Fund and Alger Health Sciences, you can compare the effects of market volatilities on Federated Kaufmann 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 Federated Kaufmann with a short position of Alger Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Kaufmann and Alger Health.
Diversification Opportunities for Federated Kaufmann and Alger Health
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Federated and Alger is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Federated Kaufmann Fund 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 Federated Kaufmann 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 Federated Kaufmann Fund 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 Federated Kaufmann i.e., Federated Kaufmann and Alger Health go up and down completely randomly.
Pair Corralation between Federated Kaufmann and Alger Health
Assuming the 90 days horizon Federated Kaufmann Fund is expected to generate 1.26 times more return on investment than Alger Health. However, Federated Kaufmann is 1.26 times more volatile than Alger Health Sciences. It trades about 0.32 of its potential returns per unit of risk. Alger Health Sciences is currently generating about 0.11 per unit of risk. If you would invest 610.00 in Federated Kaufmann Fund on September 4, 2024 and sell it today you would earn a total of 44.00 from holding Federated Kaufmann Fund or generate 7.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Kaufmann Fund vs. Alger Health Sciences
Performance |
| Timeline |
| Federated Kaufmann |
| Alger Health Sciences |
Federated Kaufmann and Alger Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Kaufmann and Alger Health
The main advantage of trading using opposite Federated Kaufmann and Alger Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Kaufmann 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.| Federated Kaufmann vs. Federated Emerging Market | Federated Kaufmann vs. Federated Mdt All | Federated Kaufmann vs. Federated Mdt Balanced | Federated Kaufmann vs. Federated Global Allocation |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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