Correlation Between Alger International and Extended Market
Can any of the company-specific risk be diversified away by investing in both Alger International and Extended Market 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 Extended Market 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 Extended Market Index, you can compare the effects of market volatilities on Alger International and Extended Market 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 Extended Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger International and Extended Market.
Diversification Opportunities for Alger International and Extended Market
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alger and Extended is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Alger International Growth and Extended Market Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extended Market Index 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 Extended Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extended Market Index has no effect on the direction of Alger International i.e., Alger International and Extended Market go up and down completely randomly.
Pair Corralation between Alger International and Extended Market
Assuming the 90 days horizon Alger International Growth is expected to under-perform the Extended Market. In addition to that, Alger International is 1.64 times more volatile than Extended Market Index. It trades about -0.07 of its total potential returns per unit of risk. Extended Market Index is currently generating about 0.11 per unit of volatility. If you would invest 2,415 in Extended Market Index on September 15, 2024 and sell it today you would earn a total of 45.00 from holding Extended Market Index or generate 1.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger International Growth vs. Extended Market Index
Performance |
| Timeline |
| Alger International |
| Extended Market Index |
Alger International and Extended Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger International and Extended Market
The main advantage of trading using opposite Alger International and Extended Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger International position performs unexpectedly, Extended Market 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 Extended Market will offset losses from the drop in Extended Market's long position.| Alger International vs. Alger Midcap Growth | Alger International vs. Alger Midcap Growth | Alger International vs. Alger Mid Cap | Alger International vs. Alger Small Cap |
| Extended Market vs. Income Fund Income | Extended Market vs. Usaa Nasdaq 100 | Extended Market vs. Victory Diversified Stock | Extended Market vs. Intermediate Term Bond Fund |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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