Correlation Between Alger Concentrated and Global Technology

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

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

Diversification Opportunities for Alger Concentrated and Global Technology

0.92

Correlation Coefficient

Alger Concentrated  Global Technology

Almost no diversification

The 3 months correlation between Alger and Global is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Alger Concentrated Equity and Global Technology Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Technology and Alger Concentrated 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 Concentrated Equity are associated (or correlated) with Global Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Technology has no effect on the direction of Alger Concentrated i.e., Alger Concentrated and Global Technology go up and down completely randomly.

Pair Corralation between Alger Concentrated and Global Technology

Assuming the 90 days horizon Alger Concentrated Equity is expected to under-perform the Global Technology. In addition to that, Alger Concentrated is 1.27 times more volatile than Global Technology Portfolio. It trades about -0.12 of its total potential returns per unit of risk. Global Technology Portfolio is currently generating about -0.1 per unit of volatility. If you would invest  2,188  in Global Technology Portfolio on October 15, 2024 and sell it today you would lose (48.00) from holding Global Technology Portfolio or give up 2.19% of portfolio value over 90 days.

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

Alger Concentrated Equity  vs.  Global Technology Portfolio

Alger Concentrated Equity

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Concentrated Equity are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Alger Concentrated may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Global Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Technology Portfolio are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Global Technology 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 Concentrated and Global Technology

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

The idea behind Alger Concentrated Equity and Global Technology Portfolio 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.