Correlation Between American Funds and Alger Spectra

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

By analyzing existing cross correlation between American Funds The and Alger Spectra Fund, you can compare the effects of market volatilities on American Funds and Alger Spectra 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 American Funds with a short position of Alger Spectra. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Alger Spectra.

Diversification Opportunities for American Funds and Alger Spectra

0.69

Correlation Coefficient

American Funds  Alger Spectra

Poor diversification

The 3 months correlation between American and Alger is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding American Funds The and Alger Spectra Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Spectra and American Funds 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 American Funds The are associated (or correlated) with Alger Spectra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Spectra has no effect on the direction of American Funds i.e., American Funds and Alger Spectra go up and down completely randomly.

Pair Corralation between American Funds and Alger Spectra

Assuming the 90 days horizon American Funds The is expected to under-perform the Alger Spectra. In addition to that, American Funds is 1.33 times more volatile than Alger Spectra Fund. It trades about -0.18 of its total potential returns per unit of risk. Alger Spectra Fund is currently generating about -0.18 per unit of volatility. If you would invest  3,175  in Alger Spectra Fund on October 7, 2024 and sell it today you would lose (246.00) from holding Alger Spectra Fund or give up 7.75% of portfolio value over 90 days.

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

American Funds The  vs.  Alger Spectra Fund

American Funds

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Funds The has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, American Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alger Spectra

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with American Funds and Alger Spectra

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

The idea behind American Funds The and Alger Spectra Fund 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.