Correlation Between Global Gold and Alger Emerging
Can any of the company-specific risk be diversified away by investing in both Global Gold and Alger Emerging 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 Global Gold and Alger Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Gold Fund and Alger Emerging Markets, you can compare the effects of market volatilities on Global Gold and Alger Emerging 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 Global Gold with a short position of Alger Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and Alger Emerging.
Diversification Opportunities for Global Gold and Alger Emerging
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Alger is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and Alger Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Emerging Markets and Global Gold 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 Global Gold Fund are associated (or correlated) with Alger Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Emerging Markets has no effect on the direction of Global Gold i.e., Global Gold and Alger Emerging go up and down completely randomly.
Pair Corralation between Global Gold and Alger Emerging
Assuming the 90 days horizon Global Gold Fund is expected to under-perform the Alger Emerging. In addition to that, Global Gold is 2.58 times more volatile than Alger Emerging Markets. It trades about -0.2 of its total potential returns per unit of risk. Alger Emerging Markets is currently generating about -0.25 per unit of volatility. If you would invest 1,117 in Alger Emerging Markets on October 9, 2024 and sell it today you would lose (37.00) from holding Alger Emerging Markets or give up 3.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Gold Fund vs. Alger Emerging Markets
Performance |
| Timeline |
| Global Gold Fund |
| Alger Emerging Markets |
Global Gold and Alger Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Gold and Alger Emerging
The main advantage of trading using opposite Global Gold and Alger Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold position performs unexpectedly, Alger Emerging 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 Emerging will offset losses from the drop in Alger Emerging's long position.| Global Gold vs. Dws Government Money | Global Gold vs. Leader Short Term Bond | Global Gold vs. Bbh Intermediate Municipal | Global Gold vs. Georgia Tax Free Bond |
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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 Stocks Directory module to find actively traded stocks across global markets.
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