Correlation Between Alger Smidcap and Mh Elite

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

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

Diversification Opportunities for Alger Smidcap and Mh Elite

-0.04

Correlation Coefficient

Alger Smidcap  Mh Elite

Good diversification

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

Pair Corralation between Alger Smidcap and Mh Elite

Assuming the 90 days horizon Alger Smidcap Focus is expected to generate 1.63 times more return on investment than Mh Elite. However, Alger Smidcap is 1.63 times more volatile than Mh Elite Select. It trades about 0.03 of its potential returns per unit of risk. Mh Elite Select is currently generating about 0.01 per unit of risk. If you would invest  1,247  in Alger Smidcap Focus on October 25, 2024 and sell it today you would earn a total of  225.00  from holding Alger Smidcap Focus or generate 18.04% return on investment over 90 days.

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

Alger Smidcap Focus  vs.  Mh Elite Select

Alger Smidcap Focus

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Smidcap Focus are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Alger Smidcap showed solid returns over the last few months and may actually be approaching a breakup point.

Mh Elite Select

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mh Elite Select 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 Smidcap and Mh Elite

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

The idea behind Alger Smidcap Focus and Mh Elite Select 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.