Correlation Between Boeing and Alger Capital

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

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

Diversification Opportunities for Boeing and Alger Capital

-0.2

Correlation Coefficient

Boeing  Alger Capital

Good diversification

The 3 months correlation between Boeing and Alger is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Alger Capital Appreciation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Capital Apprec and Boeing 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 The Boeing are associated (or correlated) with Alger Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Capital Apprec has no effect on the direction of Boeing i.e., Boeing and Alger Capital go up and down completely randomly.

Pair Corralation between Boeing and Alger Capital

Allowing for the 90-day total investment horizon The Boeing is expected to generate 1.72 times more return on investment than Alger Capital. However, Boeing is 1.72 times more volatile than Alger Capital Appreciation. It trades about 0.33 of its potential returns per unit of risk. Alger Capital Appreciation is currently generating about 0.22 per unit of risk. If you would invest  14,517  in The Boeing on September 13, 2024 and sell it today you would earn a total of  2,240  from holding The Boeing or generate 15.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

The Boeing  vs.  Alger Capital Appreciation

Boeing

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Boeing may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Alger Capital Apprec

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Capital Appreciation are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Alger Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boeing and Alger Capital

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

The idea behind The Boeing and Alger Capital Appreciation 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.