Correlation Between Alger Concentrated and Alger International

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

Diversification Opportunities for Alger Concentrated and Alger International

0.02

Correlation Coefficient

Alger Concentrated  Alger International

Significant diversification

The 3 months correlation between Alger and ALGER is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Alger Concentrated Equity and Alger International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger International 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 Alger International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger International has no effect on the direction of Alger Concentrated i.e., Alger Concentrated and Alger International go up and down completely randomly.

Pair Corralation between Alger Concentrated and Alger International

Assuming the 90 days horizon Alger Concentrated Equity is expected to under-perform the Alger International. In addition to that, Alger Concentrated is 2.06 times more volatile than Alger International Growth. It trades about -0.06 of its total potential returns per unit of risk. Alger International Growth is currently generating about 0.09 per unit of volatility. If you would invest  1,955  in Alger International Growth on December 25, 2024 and sell it today you would earn a total of  102.00  from holding Alger International Growth or generate 5.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Alger Concentrated Equity  vs.  Alger International Growth

Alger Concentrated Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alger Concentrated Equity 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 International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alger International Growth are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Alger International 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 Alger International

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

The idea behind Alger Concentrated Equity and Alger International Growth 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.