Correlation Between State Street and Alger Health
Can any of the company-specific risk be diversified away by investing in both State Street 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 State Street and Alger Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Target and Alger Health Sciences, you can compare the effects of market volatilities on State Street 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 State Street with a short position of Alger Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Alger Health.
Diversification Opportunities for State Street and Alger Health
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between State and Alger is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding State Street Target 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 State Street 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 State Street Target 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 State Street i.e., State Street and Alger Health go up and down completely randomly.
Pair Corralation between State Street and Alger Health
Assuming the 90 days horizon State Street Target is expected to generate 0.69 times more return on investment than Alger Health. However, State Street Target is 1.45 times less risky than Alger Health. It trades about 0.31 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 1,627 in State Street Target on September 4, 2024 and sell it today you would earn a total of 62.00 from holding State Street Target or generate 3.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Target vs. Alger Health Sciences
Performance |
| Timeline |
| State Street Target |
| Alger Health Sciences |
State Street and Alger Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Alger Health
The main advantage of trading using opposite State Street and Alger Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street 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.| State Street vs. Franklin High Yield | State Street vs. T Rowe Price | State Street vs. Vanguard California Long Term | State Street vs. California High Yield Municipal |
| Alger Health vs. Health Biotchnology Portfolio | Alger Health vs. Baron Health Care | Alger Health vs. Health Biotchnology Portfolio | Alger Health vs. Highland Longshort Healthcare |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |