Correlation Between Alger Midcap and Federated Hermes

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

Diversification Opportunities for Alger Midcap and Federated Hermes

-0.07

Correlation Coefficient

Alger Midcap  Federated Hermes

Good diversification

The 3 months correlation between Alger and Federated is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Alger Midcap Growth and Federated Hermes Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes Con 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 Federated Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes Con has no effect on the direction of Alger Midcap i.e., Alger Midcap and Federated Hermes go up and down completely randomly.

Pair Corralation between Alger Midcap and Federated Hermes

Assuming the 90 days horizon Alger Midcap Growth is expected to under-perform the Federated Hermes. In addition to that, Alger Midcap is 18.91 times more volatile than Federated Hermes Conservative. It trades about -0.02 of its total potential returns per unit of risk. Federated Hermes Conservative is currently generating about 0.16 per unit of volatility. If you would invest  997.00  in Federated Hermes Conservative on December 2, 2024 and sell it today you would earn a total of  5.00  from holding Federated Hermes Conservative or generate 0.5% return on investment over 90 days.

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

Alger Midcap Growth  vs.  Federated Hermes Conservative

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.

Federated Hermes Con

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Hermes Conservative are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Federated Hermes 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 Federated Hermes

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

The idea behind Alger Midcap Growth and Federated Hermes Conservative 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.