Correlation Between Alger Midcap and Alger 35

Can any of the company-specific risk be diversified away by investing in both Alger Midcap and Alger 35 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 Midcap and Alger 35 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alger Midcap Growth and Alger 35 Fund, you can compare the effects of market volatilities on Alger Midcap and Alger 35 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 Midcap with a short position of Alger 35. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Midcap and Alger 35.

Diversification Opportunities for Alger Midcap and Alger 35

0.39

Correlation Coefficient

Alger Midcap  Alger 35

Weak diversification

The 3 months correlation between Alger and Alger is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Alger Midcap Growth and Alger 35 Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger 35 Fund and Alger Midcap 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 Midcap Growth are associated (or correlated) with Alger 35. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger 35 Fund has no effect on the direction of Alger Midcap i.e., Alger Midcap and Alger 35 go up and down completely randomly.

Pair Corralation between Alger Midcap and Alger 35

Assuming the 90 days horizon Alger Midcap Growth is expected to under-perform the Alger 35. But the mutual fund apears to be less risky and, when comparing its historical volatility, Alger Midcap Growth is 1.29 times less risky than Alger 35. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Alger 35 Fund is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,802  in Alger 35 Fund on December 1, 2024 and sell it today you would lose (89.00) from holding Alger 35 Fund or give up 4.94% of portfolio value over 90 days.

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

Alger Midcap Growth  vs.  Alger 35 Fund

Alger Midcap Growth

Risk-Adjusted Performance

Very Weak

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

Alger 35 Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alger 35 Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Alger 35 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 Midcap and Alger 35

The main advantage of trading using opposite Alger Midcap and Alger 35 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Midcap position performs unexpectedly, Alger 35 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 35 will offset losses from the drop in Alger 35's long position.

The idea behind Alger Midcap Growth and Alger 35 Fund 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.