Correlation Between Alger International and Alger Midcap
Can any of the company-specific risk be diversified away by investing in both Alger International and Alger Midcap 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 International and Alger Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alger International Growth and Alger Midcap Growth, you can compare the effects of market volatilities on Alger International and Alger Midcap 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 International with a short position of Alger Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger International and Alger Midcap.
Diversification Opportunities for Alger International and Alger Midcap
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Alger and Alger is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Alger International Growth and Alger Midcap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Midcap Growth and Alger International 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 International Growth are associated (or correlated) with Alger Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Midcap Growth has no effect on the direction of Alger International i.e., Alger International and Alger Midcap go up and down completely randomly.
Pair Corralation between Alger International and Alger Midcap
Assuming the 90 days horizon Alger International Growth is expected to generate 0.49 times more return on investment than Alger Midcap. However, Alger International Growth is 2.06 times less risky than Alger Midcap. It trades about 0.05 of its potential returns per unit of risk. Alger Midcap Growth is currently generating about -0.26 per unit of risk. If you would invest 1,937 in Alger International Growth on December 4, 2024 and sell it today you would earn a total of 15.00 from holding Alger International Growth or generate 0.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Alger International Growth vs. Alger Midcap Growth
Performance |
| Timeline |
| Alger International |
| Alger Midcap Growth |
Alger International and Alger Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger International and Alger Midcap
The main advantage of trading using opposite Alger International and Alger Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger International position performs unexpectedly, Alger Midcap 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 Midcap will offset losses from the drop in Alger Midcap's long position.| Alger International vs. Prudential California Muni | Alger International vs. Legg Mason Partners | Alger International vs. T Rowe Price | Alger International vs. Dws Government Money |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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