Correlation Between Alger Funds and MARTIN

Can any of the company-specific risk be diversified away by investing in both Alger Funds and MARTIN 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 MARTIN 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 MARTIN MARIETTA MATLS, you can compare the effects of market volatilities on Alger Funds and MARTIN 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 MARTIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Funds and MARTIN.

Diversification Opportunities for Alger Funds and MARTIN

-0.63

Correlation Coefficient

Alger Funds  MARTIN

Excellent diversification

The 3 months correlation between Alger and MARTIN is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Alger Funds Mid and MARTIN MARIETTA MATLS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARTIN MARIETTA MATLS 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 MARTIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MARTIN MARIETTA MATLS has no effect on the direction of Alger Funds i.e., Alger Funds and MARTIN go up and down completely randomly.

Pair Corralation between Alger Funds and MARTIN

Assuming the 90 days horizon Alger Funds Mid is expected to generate 2.71 times more return on investment than MARTIN. However, Alger Funds is 2.71 times more volatile than MARTIN MARIETTA MATLS. It trades about 0.07 of its potential returns per unit of risk. MARTIN MARIETTA MATLS is currently generating about 0.01 per unit of risk. If you would invest  1,214  in Alger Funds Mid on October 12, 2024 and sell it today you would earn a total of  623.00  from holding Alger Funds Mid or generate 51.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	62.83%
Values	Daily Returns

Alger Funds Mid  vs.  MARTIN MARIETTA MATLS

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.

MARTIN MARIETTA MATLS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Alger Funds and MARTIN

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

The idea behind Alger Funds Mid and MARTIN MARIETTA MATLS 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.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.