Correlation Between Oil Gas and Alger Midcap

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

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

Diversification Opportunities for Oil Gas and Alger Midcap

0.2

Correlation Coefficient

Oil Gas  Alger Midcap

Modest diversification

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

Pair Corralation between Oil Gas and Alger Midcap

Assuming the 90 days horizon Oil Gas Ultrasector is expected to under-perform the Alger Midcap. In addition to that, Oil Gas is 1.1 times more volatile than Alger Midcap Growth. It trades about -0.5 of its total potential returns per unit of risk. Alger Midcap Growth is currently generating about -0.24 per unit of volatility. If you would invest  1,653  in Alger Midcap Growth on October 4, 2024 and sell it today you would lose (116.00) from holding Alger Midcap Growth or give up 7.02% of portfolio value over 90 days.

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

Oil Gas Ultrasector  vs.  Alger Midcap Growth

Oil Gas Ultrasector

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oil Gas Ultrasector has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Alger Midcap Growth

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Oil Gas and Alger Midcap

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

The idea behind Oil Gas Ultrasector and Alger Midcap 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.