Correlation Between Alger Global and Alger Emerging
Can any of the company-specific risk be diversified away by investing in both Alger Global and Alger Emerging 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 Global and Alger Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alger Global Growth and Alger Emerging Markets, you can compare the effects of market volatilities on Alger Global and Alger Emerging 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 Global with a short position of Alger Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Global and Alger Emerging.
Diversification Opportunities for Alger Global and Alger Emerging
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Alger and Alger is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Alger Global Growth and Alger Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Emerging Markets and Alger Global 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 Global Growth are associated (or correlated) with Alger Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Emerging Markets has no effect on the direction of Alger Global i.e., Alger Global and Alger Emerging go up and down completely randomly.
Pair Corralation between Alger Global and Alger Emerging
Assuming the 90 days horizon Alger Global Growth is expected to generate 1.03 times more return on investment than Alger Emerging. However, Alger Global is 1.03 times more volatile than Alger Emerging Markets. It trades about 0.08 of its potential returns per unit of risk. Alger Emerging Markets is currently generating about 0.04 per unit of risk. If you would invest 2,290 in Alger Global Growth on August 26, 2024 and sell it today you would earn a total of 1,031 from holding Alger Global Growth or generate 45.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Global Growth vs. Alger Emerging Markets
Performance |
| Timeline |
| Alger Global Growth |
| Alger Emerging Markets |
Alger Global and Alger Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Global and Alger Emerging
The main advantage of trading using opposite Alger Global and Alger Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Global position performs unexpectedly, Alger Emerging 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 Emerging will offset losses from the drop in Alger Emerging's long position.| Alger Global vs. Alger Midcap Growth | Alger Global vs. Alger Midcap Growth | Alger Global vs. Alger Mid Cap | Alger Global vs. Alger Small Cap |
| Alger Emerging vs. Alger Midcap Growth | Alger Emerging vs. Alger Midcap Growth | Alger Emerging vs. Alger Mid Cap | Alger Emerging vs. Alger Small Cap |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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