Correlation Between Ab Bond and Alger Spectra

Can any of the company-specific risk be diversified away by investing in both Ab Bond 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 Ab Bond and Alger Spectra into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ab Bond Inflation and Alger Spectra Fund, you can compare the effects of market volatilities on Ab Bond 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 Ab Bond with a short position of Alger Spectra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Bond and Alger Spectra.

Diversification Opportunities for Ab Bond and Alger Spectra

-0.31

Correlation Coefficient

Ab Bond  Alger Spectra

Very good diversification

The 3 months correlation between ABNTX and Alger is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ab Bond Inflation and Alger Spectra Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Spectra and Ab Bond 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 Ab Bond Inflation 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 Ab Bond i.e., Ab Bond and Alger Spectra go up and down completely randomly.

Pair Corralation between Ab Bond and Alger Spectra

Assuming the 90 days horizon Ab Bond Inflation is expected to generate 0.09 times more return on investment than Alger Spectra. However, Ab Bond Inflation is 11.7 times less risky than Alger Spectra. It trades about -0.27 of its potential returns per unit of risk. Alger Spectra Fund is currently generating about -0.13 per unit of risk. If you would invest  1,014  in Ab Bond Inflation on October 11, 2024 and sell it today you would lose (10.00) from holding Ab Bond Inflation or give up 0.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ab Bond Inflation  vs.  Alger Spectra Fund

Ab Bond Inflation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Bond Inflation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Ab Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alger Spectra

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Spectra Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Alger Spectra is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ab Bond and Alger Spectra

The main advantage of trading using opposite Ab Bond and Alger Spectra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Bond 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 Ab Bond Inflation 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.