Correlation Between Alger 35 and Alger Mid

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

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

Diversification Opportunities for Alger 35 and Alger Mid

0.93

Correlation Coefficient

Alger 35  Alger Mid

Almost no diversification

The 3 months correlation between Alger and Alger is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Alger 35 ETF and Alger Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Mid Cap and Alger 35 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 35 ETF are associated (or correlated) with Alger Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Mid Cap has no effect on the direction of Alger 35 i.e., Alger 35 and Alger Mid go up and down completely randomly.

Pair Corralation between Alger 35 and Alger Mid

Given the investment horizon of 90 days Alger 35 ETF is expected to generate 0.98 times more return on investment than Alger Mid. However, Alger 35 ETF is 1.02 times less risky than Alger Mid. It trades about 0.1 of its potential returns per unit of risk. Alger Mid Cap is currently generating about 0.07 per unit of risk. If you would invest  1,361  in Alger 35 ETF on October 10, 2024 and sell it today you would earn a total of  1,277  from holding Alger 35 ETF or generate 93.83% return on investment over 90 days.

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

Alger 35 ETF  vs.  Alger Mid Cap

Alger 35 ETF

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alger 35 ETF are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Alger 35 showed solid returns over the last few months and may actually be approaching a breakup point.

Alger Mid Cap

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Mid Cap are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Alger Mid may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Alger 35 and Alger Mid

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

The idea behind Alger 35 ETF and Alger Mid Cap 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.