Correlation Between Alger 35 and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Alger 35 and Dow Jones 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 35 and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alger 35 ETF and Dow Jones Industrial, you can compare the effects of market volatilities on Alger 35 and Dow Jones 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 35 with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger 35 and Dow Jones.
Diversification Opportunities for Alger 35 and Dow Jones
Almost no diversification
The 3 months correlation between Alger and Dow is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Alger 35 ETF and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Alger 35 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 35 ETF are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Alger 35 i.e., Alger 35 and Dow Jones go up and down completely randomly.
Pair Corralation between Alger 35 and Dow Jones
Given the investment horizon of 90 days Alger 35 ETF is expected to generate 1.94 times more return on investment than Dow Jones. However, Alger 35 is 1.94 times more volatile than Dow Jones Industrial. It trades about 0.1 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 1,347 in Alger 35 ETF on August 26, 2024 and sell it today you would earn a total of 1,173 from holding Alger 35 ETF or generate 87.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger 35 ETF vs. Dow Jones Industrial
Performance |
| Timeline |
Alger 35 and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Alger 35 ETF
Pair trading matchups for Alger 35
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Alger 35 and Dow Jones
The main advantage of trading using opposite Alger 35 and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger 35 position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Alger 35 vs. Sterling Capital Focus | Alger 35 vs. Northern Lights | Alger 35 vs. AdvisorShares Dorsey Wright | Alger 35 vs. 6 Meridian Quality |
| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |