Correlation Between Federated Hermes and Alger Midcap

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

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

Diversification Opportunities for Federated Hermes and Alger Midcap

0.84

Correlation Coefficient

Federated Hermes  Alger Midcap

Very poor diversification

The 3 months correlation between Federated and Alger is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes Conservative 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 Federated Hermes 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 Federated Hermes Conservative 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 Federated Hermes i.e., Federated Hermes and Alger Midcap go up and down completely randomly.

Pair Corralation between Federated Hermes and Alger Midcap

Assuming the 90 days horizon Federated Hermes is expected to generate 19.65 times less return on investment than Alger Midcap. But when comparing it to its historical volatility, Federated Hermes Conservative is 12.19 times less risky than Alger Midcap. It trades about 0.15 of its potential returns per unit of risk. Alger Midcap Growth is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  799.00  in Alger Midcap Growth on September 12, 2024 and sell it today you would earn a total of  134.00  from holding Alger Midcap Growth or generate 16.77% return on investment over 90 days.

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

Federated Hermes Conservative  vs.  Alger Midcap Growth

Federated Hermes Con

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Hermes Conservative are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Federated Hermes is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alger Midcap Growth

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Midcap Growth are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Alger Midcap showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Federated Hermes and Alger Midcap

The main advantage of trading using opposite Federated Hermes and Alger Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Hermes 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 Federated Hermes Conservative 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.