Correlation Between Alger Funds and HONEYWELL

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

By analyzing existing cross correlation between Alger Funds Mid and HONEYWELL INTERNATIONAL INC, you can compare the effects of market volatilities on Alger Funds and HONEYWELL 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 Alger Funds with a short position of HONEYWELL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Funds and HONEYWELL.

Diversification Opportunities for Alger Funds and HONEYWELL

-0.28

Correlation Coefficient

Alger Funds  HONEYWELL

Very good diversification

The 3 months correlation between Alger and HONEYWELL is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Alger Funds Mid and HONEYWELL INTERNATIONAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HONEYWELL INTERNATIONAL and Alger Funds 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 Alger Funds Mid are associated (or correlated) with HONEYWELL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HONEYWELL INTERNATIONAL has no effect on the direction of Alger Funds i.e., Alger Funds and HONEYWELL go up and down completely randomly.

Pair Corralation between Alger Funds and HONEYWELL

Assuming the 90 days horizon Alger Funds Mid is expected to generate 1.06 times more return on investment than HONEYWELL. However, Alger Funds is 1.06 times more volatile than HONEYWELL INTERNATIONAL INC. It trades about -0.08 of its potential returns per unit of risk. HONEYWELL INTERNATIONAL INC is currently generating about -0.16 per unit of risk. If you would invest  1,894  in Alger Funds Mid on October 11, 2024 and sell it today you would lose (57.00) from holding Alger Funds Mid or give up 3.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.91%
Values	Daily Returns

Alger Funds Mid  vs.  HONEYWELL INTERNATIONAL INC

Alger Funds Mid

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Funds Mid are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Alger Funds may actually be approaching a critical reversion point that can send shares even higher in February 2025.

HONEYWELL INTERNATIONAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HONEYWELL INTERNATIONAL INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HONEYWELL is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alger Funds and HONEYWELL

The main advantage of trading using opposite Alger Funds and HONEYWELL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Funds position performs unexpectedly, HONEYWELL 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 HONEYWELL will offset losses from the drop in HONEYWELL's long position.

The idea behind Alger Funds Mid and HONEYWELL INTERNATIONAL INC 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.