Correlation Between Western Asset and Alger Health
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Alger Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Porate and Alger Health Sciences, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Alger Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Alger Health.
Diversification Opportunities for Western Asset and Alger Health
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Western and Alger is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Porate 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 Western Asset 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 Western Asset Porate 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 Western Asset i.e., Western Asset and Alger Health go up and down completely randomly.
Pair Corralation between Western Asset and Alger Health
Assuming the 90 days horizon Western Asset is expected to generate 2.12 times less return on investment than Alger Health. But when comparing it to its historical volatility, Western Asset Porate is 2.07 times less risky than Alger Health. It trades about 0.09 of its potential returns per unit of risk. Alger Health Sciences is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,341 in Alger Health Sciences on September 5, 2024 and sell it today you would earn a total of 21.00 from holding Alger Health Sciences or generate 1.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Porate vs. Alger Health Sciences
Performance |
| Timeline |
| Western Asset Porate |
| Alger Health Sciences |
Western Asset and Alger Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Alger Health
The main advantage of trading using opposite Western Asset and Alger Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Alger Health Sciences | Western Asset vs. Alphacentric Lifesci Healthcare | Western Asset vs. Eventide Healthcare Life | Western Asset vs. Live Oak Health |
| Alger Health vs. T Rowe Price | Alger Health vs. Qs Moderate Growth | Alger Health vs. T Rowe Price | Alger Health vs. T Rowe Price |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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