Correlation Between Alger Capital and Vanguard 500
Can any of the company-specific risk be diversified away by investing in both Alger Capital and Vanguard 500 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 Capital and Vanguard 500 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alger Capital Appreciation and Vanguard 500 Index, you can compare the effects of market volatilities on Alger Capital and Vanguard 500 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 Capital with a short position of Vanguard 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Capital and Vanguard 500.
Diversification Opportunities for Alger Capital and Vanguard 500
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alger and Vanguard is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Alger Capital Appreciation and Vanguard 500 Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard 500 Index and Alger Capital 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 Capital Appreciation are associated (or correlated) with Vanguard 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard 500 Index has no effect on the direction of Alger Capital i.e., Alger Capital and Vanguard 500 go up and down completely randomly.
Pair Corralation between Alger Capital and Vanguard 500
Assuming the 90 days horizon Alger Capital Appreciation is expected to generate 2.43 times more return on investment than Vanguard 500. However, Alger Capital is 2.43 times more volatile than Vanguard 500 Index. It trades about 0.22 of its potential returns per unit of risk. Vanguard 500 Index is currently generating about 0.1 per unit of risk. If you would invest 4,041 in Alger Capital Appreciation on September 13, 2024 and sell it today you would earn a total of 219.00 from holding Alger Capital Appreciation or generate 5.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Capital Appreciation vs. Vanguard 500 Index
Performance |
| Timeline |
| Alger Capital Apprec |
| Vanguard 500 Index |
Alger Capital and Vanguard 500 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Capital and Vanguard 500
The main advantage of trading using opposite Alger Capital and Vanguard 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Capital position performs unexpectedly, Vanguard 500 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 Vanguard 500 will offset losses from the drop in Vanguard 500's long position.| Alger Capital vs. Small Cap Stock | Alger Capital vs. T Rowe Price | Alger Capital vs. Century Small Cap | Alger Capital vs. Eic Value Fund |
| Vanguard 500 vs. Vanguard Total International | Vanguard 500 vs. Vanguard Total Bond | Vanguard 500 vs. Vanguard Small Cap Index | Vanguard 500 vs. Vanguard Reit Index |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |