Correlation Between Small Company and Alger Health
Can any of the company-specific risk be diversified away by investing in both Small Company 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 Small Company and Alger Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Pany Value and Alger Health Sciences, you can compare the effects of market volatilities on Small Company 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 Small Company with a short position of Alger Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Company and Alger Health.
Diversification Opportunities for Small Company and Alger Health
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Small and Alger is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany Value 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 Small Company 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 Small Pany Value 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 Small Company i.e., Small Company and Alger Health go up and down completely randomly.
Pair Corralation between Small Company and Alger Health
Assuming the 90 days horizon Small Pany Value is expected to generate 1.44 times more return on investment than Alger Health. However, Small Company is 1.44 times more volatile than Alger Health Sciences. It trades about 0.05 of its potential returns per unit of risk. Alger Health Sciences is currently generating about 0.01 per unit of risk. If you would invest 3,375 in Small Pany Value on August 30, 2024 and sell it today you would earn a total of 999.00 from holding Small Pany Value or generate 29.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Pany Value vs. Alger Health Sciences
Performance |
| Timeline |
| Small Pany Value |
| Alger Health Sciences |
Small Company and Alger Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Company and Alger Health
The main advantage of trading using opposite Small Company and Alger Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Company 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.| Small Company vs. Growth Fund Of | Small Company vs. Rational Defensive Growth | Small Company vs. Artisan Small Cap | Small Company vs. Small Midcap Dividend Income |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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