Correlation Between Health Biotchnology and Alger Global
Can any of the company-specific risk be diversified away by investing in both Health Biotchnology 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 Health Biotchnology and Alger Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Health Biotchnology Portfolio and Alger Global Growth, you can compare the effects of market volatilities on Health Biotchnology 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 Health Biotchnology with a short position of Alger Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Biotchnology and Alger Global.
Diversification Opportunities for Health Biotchnology and Alger Global
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HEALTH and Alger is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Health Biotchnology Portfolio 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 Health Biotchnology 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 Health Biotchnology Portfolio 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 Health Biotchnology i.e., Health Biotchnology and Alger Global go up and down completely randomly.
Pair Corralation between Health Biotchnology and Alger Global
Assuming the 90 days horizon Health Biotchnology is expected to generate 2.3 times less return on investment than Alger Global. But when comparing it to its historical volatility, Health Biotchnology Portfolio is 1.4 times less risky than Alger Global. It trades about 0.05 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Health Biotchnology Portfolio vs. Alger Global Growth
Performance |
| Timeline |
| Health Biotchnology |
| Alger Global Growth |
Health Biotchnology and Alger Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Biotchnology and Alger Global
The main advantage of trading using opposite Health Biotchnology and Alger Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Biotchnology 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 Health Biotchnology Portfolio 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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