Correlation Between Alger International and Alger Responsible

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

By analyzing existing cross correlation between Alger International Growth and Alger Responsible Investing, you can compare the effects of market volatilities on Alger International and Alger Responsible 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 International with a short position of Alger Responsible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger International and Alger Responsible.

Diversification Opportunities for Alger International and Alger Responsible

-0.04

Correlation Coefficient

Alger International  Alger Responsible

Good diversification

The 3 months correlation between Alger and Alger is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Alger International Growth and Alger Responsible Investing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Responsible and Alger International 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 International Growth are associated (or correlated) with Alger Responsible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Responsible has no effect on the direction of Alger International i.e., Alger International and Alger Responsible go up and down completely randomly.

Pair Corralation between Alger International and Alger Responsible

Assuming the 90 days horizon Alger International Growth is expected to generate 0.67 times more return on investment than Alger Responsible. However, Alger International Growth is 1.49 times less risky than Alger Responsible. It trades about 0.08 of its potential returns per unit of risk. Alger Responsible Investing is currently generating about -0.08 per unit of risk. If you would invest  1,903  in Alger International Growth on December 25, 2024 and sell it today you would earn a total of  94.00  from holding Alger International Growth or generate 4.94% return on investment over 90 days.

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

Alger International Growth  vs.  Alger Responsible Investing

Alger International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alger International Growth are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Alger International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alger Responsible

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alger Responsible Investing has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Alger International and Alger Responsible

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

The idea behind Alger International Growth and Alger Responsible Investing 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.