Correlation Between Alger 35 and IShares MSCI

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

Diversification Opportunities for Alger 35 and IShares MSCI

0.84

Correlation Coefficient

Alger 35  IShares MSCI

Very poor diversification

The 3 months correlation between Alger and IShares is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Alger 35 ETF and iShares MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI USA 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 MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI USA has no effect on the direction of Alger 35 i.e., Alger 35 and IShares MSCI go up and down completely randomly.

Pair Corralation between Alger 35 and IShares MSCI

Given the investment horizon of 90 days Alger 35 ETF is expected to under-perform the IShares MSCI. In addition to that, Alger 35 is 1.58 times more volatile than iShares MSCI USA. It trades about -0.09 of its total potential returns per unit of risk. iShares MSCI USA is currently generating about -0.03 per unit of volatility. If you would invest  20,735  in iShares MSCI USA on December 28, 2024 and sell it today you would lose (649.00) from holding iShares MSCI USA or give up 3.13% of portfolio value over 90 days.

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

Alger 35 ETF  vs.  iShares MSCI USA

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 fragile performance in the last few months, the Etf's technical and fundamental indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the fund sophisticated investors.

iShares MSCI USA

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares MSCI USA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IShares MSCI is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Alger 35 and IShares MSCI

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

The idea behind Alger 35 ETF and iShares MSCI USA 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.