Correlation Between Select Fund and Alger Capital
Can any of the company-specific risk be diversified away by investing in both Select Fund and Alger Capital 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 Select Fund and Alger Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select Fund R and Alger Capital Appreciation, you can compare the effects of market volatilities on Select Fund and Alger Capital 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 Select Fund with a short position of Alger Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Fund and Alger Capital.
Diversification Opportunities for Select Fund and Alger Capital
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Select and Alger is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Select Fund R and Alger Capital Appreciation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Capital Apprec and Select Fund 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 Select Fund R are associated (or correlated) with Alger Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Capital Apprec has no effect on the direction of Select Fund i.e., Select Fund and Alger Capital go up and down completely randomly.
Pair Corralation between Select Fund and Alger Capital
Assuming the 90 days horizon Select Fund is expected to generate 2.1 times less return on investment than Alger Capital. But when comparing it to its historical volatility, Select Fund R is 1.03 times less risky than Alger Capital. It trades about 0.07 of its potential returns per unit of risk. Alger Capital Appreciation is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,771 in Alger Capital Appreciation on August 30, 2024 and sell it today you would earn a total of 4,232 from holding Alger Capital Appreciation or generate 112.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Select Fund R vs. Alger Capital Appreciation
Performance |
| Timeline |
| Select Fund R |
| Alger Capital Apprec |
Select Fund and Alger Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Fund and Alger Capital
The main advantage of trading using opposite Select Fund and Alger Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Fund position performs unexpectedly, Alger Capital 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 Capital will offset losses from the drop in Alger Capital's long position.| Select Fund vs. Growth Fund Of | Select Fund vs. HUMANA INC | Select Fund vs. Aquagold International | Select Fund vs. Barloworld Ltd ADR |
| Alger Capital vs. Growth Fund Of | Alger Capital vs. HUMANA INC | Alger Capital vs. Aquagold International | Alger Capital vs. Barloworld Ltd ADR |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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