Correlation Between GM and Alger Spectra
Can any of the company-specific risk be diversified away by investing in both GM and Alger Spectra 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 GM and Alger Spectra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Alger Spectra Fund, you can compare the effects of market volatilities on GM and Alger Spectra 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 GM with a short position of Alger Spectra. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Alger Spectra.
Diversification Opportunities for GM and Alger Spectra
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Alger is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Alger Spectra Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Spectra and GM 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 General Motors are associated (or correlated) with Alger Spectra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Spectra has no effect on the direction of GM i.e., GM and Alger Spectra go up and down completely randomly.
Pair Corralation between GM and Alger Spectra
Allowing for the 90-day total investment horizon GM is expected to generate 1.85 times less return on investment than Alger Spectra. In addition to that, GM is 1.62 times more volatile than Alger Spectra Fund. It trades about 0.04 of its total potential returns per unit of risk. Alger Spectra Fund is currently generating about 0.11 per unit of volatility. If you would invest 1,755 in Alger Spectra Fund on October 24, 2024 and sell it today you would earn a total of 1,522 from holding Alger Spectra Fund or generate 86.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Alger Spectra Fund
Performance |
| Timeline |
| General Motors |
| Alger Spectra |
GM and Alger Spectra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Alger Spectra
The main advantage of trading using opposite GM and Alger Spectra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Alger Spectra 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 Spectra will offset losses from the drop in Alger Spectra's long position.The idea behind General Motors and Alger Spectra Fund 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.| Alger Spectra vs. Ashmore Emerging Markets | Alger Spectra vs. Siit Emerging Markets | Alger Spectra vs. Kinetics Market Opportunities | Alger Spectra vs. Artisan Developing World |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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