Correlation Between Alger Global and Alger Weatherbie

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

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

Diversification Opportunities for Alger Global and Alger Weatherbie

0.08

Correlation Coefficient

Alger Global  Alger Weatherbie

Significant diversification

The 3 months correlation between Alger and Alger is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Alger Global Growth and Alger Weatherbie Specialized in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Weatherbie Spe and Alger Global 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 Global Growth are associated (or correlated) with Alger Weatherbie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Weatherbie Spe has no effect on the direction of Alger Global i.e., Alger Global and Alger Weatherbie go up and down completely randomly.

Pair Corralation between Alger Global and Alger Weatherbie

Assuming the 90 days horizon Alger Global Growth is expected to under-perform the Alger Weatherbie. In addition to that, Alger Global is 2.37 times more volatile than Alger Weatherbie Specialized. It trades about -0.25 of its total potential returns per unit of risk. Alger Weatherbie Specialized is currently generating about -0.16 per unit of volatility. If you would invest  1,586  in Alger Weatherbie Specialized on September 29, 2024 and sell it today you would lose (78.00) from holding Alger Weatherbie Specialized or give up 4.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Alger Global Growth  vs.  Alger Weatherbie Specialized

Alger Global Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alger Global Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Alger Weatherbie Spe

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Weatherbie Specialized are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Alger Weatherbie is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alger Global and Alger Weatherbie

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

The idea behind Alger Global Growth and Alger Weatherbie Specialized 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.