Correlation Between Alger Capital and Select Fund

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

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

Diversification Opportunities for Alger Capital and Select Fund

0.92

Correlation Coefficient

Alger Capital  Select Fund

Almost no diversification

The 3 months correlation between Alger and Select is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Alger Capital Appreciation and Select Fund R in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Fund R and Alger Capital 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 Capital Appreciation are associated (or correlated) with Select Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Fund R has no effect on the direction of Alger Capital i.e., Alger Capital and Select Fund go up and down completely randomly.

Pair Corralation between Alger Capital and Select Fund

Assuming the 90 days horizon Alger Capital Appreciation is expected to generate 1.49 times more return on investment than Select Fund. However, Alger Capital is 1.49 times more volatile than Select Fund R. It trades about -0.05 of its potential returns per unit of risk. Select Fund R is currently generating about -0.1 per unit of risk. If you would invest  7,343  in Alger Capital Appreciation on December 26, 2024 and sell it today you would lose (568.00) from holding Alger Capital Appreciation or give up 7.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Alger Capital Appreciation  vs.  Select Fund R

Alger Capital Apprec

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alger Capital Appreciation 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.

Select Fund R

Risk-Adjusted Performance

Very Weak

Over the last 90 days Select Fund R has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Capital and Select Fund

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

The idea behind Alger Capital Appreciation and Select Fund R 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.