Correlation Between NYSE Composite and Alger Capital
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Alger Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Alger Capital Appreciation, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Alger Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Alger Capital.
Diversification Opportunities for NYSE Composite and Alger Capital
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Alger is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Alger Capital go up and down completely randomly.
Pair Corralation between NYSE Composite and Alger Capital
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.25 times less return on investment than Alger Capital. But when comparing it to its historical volatility, NYSE Composite is 2.09 times less risky than Alger Capital. It trades about 0.23 of its potential returns per unit of risk. Alger Capital Appreciation is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,938 in Alger Capital Appreciation on August 29, 2024 and sell it today you would earn a total of 148.00 from holding Alger Capital Appreciation or generate 7.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Alger Capital Appreciation
Performance |
| Timeline |
NYSE Composite and Alger Capital Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Alger Capital Appreciation
Pair trading matchups for Alger Capital
Pair Trading with NYSE Composite and Alger Capital
The main advantage of trading using opposite NYSE Composite and Alger Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Sphere Entertainment Co | NYSE Composite vs. Weibo Corp | NYSE Composite vs. BCE Inc | NYSE Composite vs. Pinterest |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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