Correlation Between Alger Balanced and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Alger Balanced and Dow Jones 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 Alger Balanced and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alger Balanced Portfolio and Dow Jones Industrial, you can compare the effects of market volatilities on Alger Balanced and Dow Jones 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 Alger Balanced with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Balanced and Dow Jones.
Diversification Opportunities for Alger Balanced and Dow Jones
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alger and Dow is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Alger Balanced Portfolio and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Alger Balanced 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 Alger Balanced Portfolio are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Alger Balanced i.e., Alger Balanced and Dow Jones go up and down completely randomly.
Pair Corralation between Alger Balanced and Dow Jones
Assuming the 90 days horizon Alger Balanced Portfolio is expected to generate 0.8 times more return on investment than Dow Jones. However, Alger Balanced Portfolio is 1.24 times less risky than Dow Jones. It trades about 0.1 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 1,649 in Alger Balanced Portfolio on August 24, 2024 and sell it today you would earn a total of 563.00 from holding Alger Balanced Portfolio or generate 34.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Balanced Portfolio vs. Dow Jones Industrial
Performance |
| Timeline |
Alger Balanced and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Alger Balanced Portfolio
Pair trading matchups for Alger Balanced
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Alger Balanced and Dow Jones
The main advantage of trading using opposite Alger Balanced and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Balanced position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Alger Balanced vs. Alger Large Cap | Alger Balanced vs. Alger Growth Income | Alger Balanced vs. Select Fund C | Alger Balanced vs. Alger Capital Appreciation |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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