Correlation Between Alger 35 and IShares Russell

Can any of the company-specific risk be diversified away by investing in both Alger 35 and IShares Russell 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 IShares Russell 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 iShares Russell 1000, you can compare the effects of market volatilities on Alger 35 and IShares Russell 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 IShares Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger 35 and IShares Russell.

Diversification Opportunities for Alger 35 and IShares Russell

0.97

Correlation Coefficient

Alger 35  IShares Russell

Almost no diversification

The 3 months correlation between Alger and IShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Alger 35 ETF and iShares Russell 1000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Russell 1000 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 IShares Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Russell 1000 has no effect on the direction of Alger 35 i.e., Alger 35 and IShares Russell go up and down completely randomly.

Pair Corralation between Alger 35 and IShares Russell

Given the investment horizon of 90 days Alger 35 ETF is expected to under-perform the IShares Russell. In addition to that, Alger 35 is 1.67 times more volatile than iShares Russell 1000. It trades about -0.07 of its total potential returns per unit of risk. iShares Russell 1000 is currently generating about -0.1 per unit of volatility. If you would invest  40,477  in iShares Russell 1000 on December 28, 2024 and sell it today you would lose (3,470) from holding iShares Russell 1000 or give up 8.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Alger 35 ETF  vs.  iShares Russell 1000

Alger 35 ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alger 35 ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Etf's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

iShares Russell 1000

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Russell 1000 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Pair Trading with Alger 35 and IShares Russell

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

The idea behind Alger 35 ETF and iShares Russell 1000 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.