Correlation Between Ep Emerging and Alger Mid

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

By analyzing existing cross correlation between Ep Emerging Markets and Alger Mid Cap, you can compare the effects of market volatilities on Ep Emerging and Alger Mid 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 Ep Emerging with a short position of Alger Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ep Emerging and Alger Mid.

Diversification Opportunities for Ep Emerging and Alger Mid

-0.76

Correlation Coefficient

Ep Emerging  Alger Mid

Pay attention - limited upside

The 3 months correlation between EPASX and Alger is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ep Emerging Markets and Alger Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Mid Cap and Ep Emerging 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 Ep Emerging Markets are associated (or correlated) with Alger Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Mid Cap has no effect on the direction of Ep Emerging i.e., Ep Emerging and Alger Mid go up and down completely randomly.

Pair Corralation between Ep Emerging and Alger Mid

Assuming the 90 days horizon Ep Emerging Markets is expected to under-perform the Alger Mid. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ep Emerging Markets is 1.44 times less risky than Alger Mid. The mutual fund trades about -0.22 of its potential returns per unit of risk. The Alger Mid Cap is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,914  in Alger Mid Cap on October 3, 2024 and sell it today you would earn a total of  126.00  from holding Alger Mid Cap or generate 6.58% return on investment over 90 days.

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

Ep Emerging Markets  vs.  Alger Mid Cap

Ep Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ep Emerging Markets 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 Mid Cap

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Mid Cap are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Alger Mid may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ep Emerging and Alger Mid

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

The idea behind Ep Emerging Markets and Alger Mid Cap 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.