Correlation Between Alger 35 and American Funds
Can any of the company-specific risk be diversified away by investing in both Alger 35 and American 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 35 and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alger 35 Fund and American Funds Retirement, you can compare the effects of market volatilities on Alger 35 and American 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 35 with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger 35 and American Funds.
Diversification Opportunities for Alger 35 and American Funds
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Alger and American is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Alger 35 Fund and American Funds Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Retirement 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 Fund are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Retirement has no effect on the direction of Alger 35 i.e., Alger 35 and American Funds go up and down completely randomly.
Pair Corralation between Alger 35 and American Funds
Assuming the 90 days horizon Alger 35 Fund is expected to generate 4.13 times more return on investment than American Funds. However, Alger 35 is 4.13 times more volatile than American Funds Retirement. It trades about 0.3 of its potential returns per unit of risk. American Funds Retirement is currently generating about 0.09 per unit of risk. If you would invest 1,606 in Alger 35 Fund on August 31, 2024 and sell it today you would earn a total of 160.00 from holding Alger 35 Fund or generate 9.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger 35 Fund vs. American Funds Retirement
Performance |
| Timeline |
| Alger 35 Fund |
| American Funds Retirement |
Alger 35 and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger 35 and American Funds
The main advantage of trading using opposite Alger 35 and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger 35 position performs unexpectedly, American 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 American Funds will offset losses from the drop in American Funds' long position.| Alger 35 vs. American Funds Retirement | Alger 35 vs. Target Retirement 2040 | Alger 35 vs. Moderately Aggressive Balanced | Alger 35 vs. Lifestyle Ii Moderate |
| American Funds vs. Baird Smallmid Cap | American Funds vs. Touchstone Small Cap | American Funds vs. Kinetics Small Cap | American Funds vs. Small Midcap Dividend Income |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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