Correlation Between Short Duration and Alger Funds

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

By analyzing existing cross correlation between Short Duration Inflation and Alger Funds Mid, you can compare the effects of market volatilities on Short Duration and Alger Funds 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 Short Duration with a short position of Alger Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Duration and Alger Funds.

Diversification Opportunities for Short Duration and Alger Funds

-0.07

Correlation Coefficient

Short Duration  Alger Funds

Good diversification

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

Pair Corralation between Short Duration and Alger Funds

Assuming the 90 days horizon Short Duration Inflation is expected to under-perform the Alger Funds. But the mutual fund apears to be less risky and, when comparing its historical volatility, Short Duration Inflation is 3.92 times less risky than Alger Funds. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Alger Funds Mid is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,742  in Alger Funds Mid on October 7, 2024 and sell it today you would earn a total of  129.00  from holding Alger Funds Mid or generate 7.41% return on investment over 90 days.

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

Short Duration Inflation  vs.  Alger Funds Mid

Short Duration Inflation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Short Duration Inflation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Short Duration is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alger Funds Mid

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Funds Mid are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Alger Funds showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Short Duration and Alger Funds

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

The idea behind Short Duration Inflation and Alger Funds Mid 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.