Correlation Between NYSE Composite and Alger ETF
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Alger ETF 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 ETF 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 ETF, you can compare the effects of market volatilities on NYSE Composite and Alger ETF 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 ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Alger ETF.
Diversification Opportunities for NYSE Composite and Alger ETF
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Alger is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and The Alger ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger ETF 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 ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger ETF has no effect on the direction of NYSE Composite i.e., NYSE Composite and Alger ETF go up and down completely randomly.
Pair Corralation between NYSE Composite and Alger ETF
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.14 times less return on investment than Alger ETF. But when comparing it to its historical volatility, NYSE Composite is 2.4 times less risky than Alger ETF. It trades about 0.42 of its potential returns per unit of risk. The Alger ETF is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 2,475 in The Alger ETF on September 1, 2024 and sell it today you would earn a total of 304.00 from holding The Alger ETF or generate 12.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
NYSE Composite vs. The Alger ETF
Performance |
| Timeline |
NYSE Composite and Alger ETF Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
The Alger ETF
Pair trading matchups for Alger ETF
Pair Trading with NYSE Composite and Alger ETF
The main advantage of trading using opposite NYSE Composite and Alger ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Alger ETF 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 ETF will offset losses from the drop in Alger ETF's long position.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |