Correlation Between Alger Mid and Alger Funds

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Can any of the company-specific risk be diversified away by investing in both Alger Mid and Alger Funds 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 Mid and Alger Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alger Mid Cap and The Alger Funds, you can compare the effects of market volatilities on Alger Mid and Alger Funds 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 Mid with a short position of Alger Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Mid and Alger Funds.

Diversification Opportunities for Alger Mid and Alger Funds

0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Alger and Alger is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Alger Mid Cap and The Alger Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Funds and Alger Mid 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 Mid Cap are associated (or correlated) with Alger Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Funds has no effect on the direction of Alger Mid i.e., Alger Mid and Alger Funds go up and down completely randomly.

Pair Corralation between Alger Mid and Alger Funds

Assuming the 90 days horizon Alger Mid Cap is expected to generate 0.76 times more return on investment than Alger Funds. However, Alger Mid Cap is 1.32 times less risky than Alger Funds. It trades about 0.34 of its potential returns per unit of risk. The Alger Funds is currently generating about 0.25 per unit of risk. If you would invest  1,981  in Alger Mid Cap on August 31, 2024 and sell it today you would earn a total of  191.00  from holding Alger Mid Cap or generate 9.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Alger Mid Cap  vs.  The Alger Funds

 Performance 
       Timeline  
Alger Mid Cap 

Risk-Adjusted Performance

24 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Alger Mid Cap are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Alger Mid showed solid returns over the last few months and may actually be approaching a breakup point.
Alger Funds 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in The Alger Funds are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Alger Funds showed solid returns over the last few months and may actually be approaching a breakup point.

Alger Mid and Alger Funds Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alger Mid and Alger Funds

The main advantage of trading using opposite Alger Mid and Alger Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Mid position performs unexpectedly, Alger Funds 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 Funds will offset losses from the drop in Alger Funds' long position.
The idea behind Alger Mid Cap and The Alger Funds pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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