Correlation Between Wilmington Multi-manager and Alger Health
Can any of the company-specific risk be diversified away by investing in both Wilmington Multi-manager 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 Wilmington Multi-manager and Alger Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wilmington Multi Manager Real and Alger Health Sciences, you can compare the effects of market volatilities on Wilmington Multi-manager 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 Wilmington Multi-manager with a short position of Alger Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wilmington Multi-manager and Alger Health.
Diversification Opportunities for Wilmington Multi-manager and Alger Health
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wilmington and Alger is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Wilmington Multi Manager Real 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 Wilmington Multi-manager 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 Wilmington Multi Manager Real 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 Wilmington Multi-manager i.e., Wilmington Multi-manager and Alger Health go up and down completely randomly.
Pair Corralation between Wilmington Multi-manager and Alger Health
Assuming the 90 days horizon Wilmington Multi-manager is expected to generate 1.55 times less return on investment than Alger Health. But when comparing it to its historical volatility, Wilmington Multi Manager Real is 1.37 times less risky than Alger Health. It trades about 0.12 of its potential returns per unit of risk. Alger Health Sciences is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,341 in Alger Health Sciences on September 3, 2024 and sell it today you would earn a total of 29.00 from holding Alger Health Sciences or generate 2.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wilmington Multi Manager Real vs. Alger Health Sciences
Performance |
| Timeline |
| Wilmington Multi-manager |
| Alger Health Sciences |
Wilmington Multi-manager and Alger Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wilmington Multi-manager and Alger Health
The main advantage of trading using opposite Wilmington Multi-manager and Alger Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilmington Multi-manager 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.The idea behind Wilmington Multi Manager Real and Alger Health Sciences 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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