Correlation Between NYSE Composite and Alger Funds
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Alger 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 NYSE Composite and Alger Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and The Alger Funds, you can compare the effects of market volatilities on NYSE Composite and Alger 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 NYSE Composite with a short position of Alger Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Alger Funds.
Diversification Opportunities for NYSE Composite and Alger Funds
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Alger is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and The Alger Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Funds 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 Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Funds has no effect on the direction of NYSE Composite i.e., NYSE Composite and Alger Funds go up and down completely randomly.
Pair Corralation between NYSE Composite and Alger Funds
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.49 times less return on investment than Alger Funds. But when comparing it to its historical volatility, NYSE Composite is 2.55 times less risky than Alger Funds. It trades about 0.24 of its potential returns per unit of risk. The Alger Funds is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,099 in The Alger Funds on August 29, 2024 and sell it today you would earn a total of 94.00 from holding The Alger Funds or generate 8.55% 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. The Alger Funds
Performance |
| Timeline |
NYSE Composite and Alger Funds Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
The Alger Funds
Pair trading matchups for Alger Funds
Pair Trading with NYSE Composite and Alger Funds
The main advantage of trading using opposite NYSE Composite and Alger Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Alger 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 Alger Funds will offset losses from the drop in Alger Funds' long position.| NYSE Composite vs. Vita Coco | NYSE Composite vs. Franklin Wireless Corp | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Toro Co |
| Alger Funds vs. Alger Midcap Growth | Alger Funds vs. Alger Midcap Growth | Alger Funds vs. Alger Mid Cap | Alger Funds vs. Alger Global Growth |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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