Correlation Between Gmo Resources and Alger Midcap

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

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

Diversification Opportunities for Gmo Resources and Alger Midcap

-0.43

Correlation Coefficient

Gmo Resources  Alger Midcap

Very good diversification

The 3 months correlation between Gmo and Alger is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Resources 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 Gmo Resources 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 Gmo Resources 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 Gmo Resources i.e., Gmo Resources and Alger Midcap go up and down completely randomly.

Pair Corralation between Gmo Resources and Alger Midcap

Assuming the 90 days horizon Gmo Resources is expected to under-perform the Alger Midcap. In addition to that, Gmo Resources is 1.04 times more volatile than Alger Midcap Growth. It trades about -0.33 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 Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Gmo Resources  vs.  Alger Midcap Growth

Gmo Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gmo Resources 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 Gmo Resources and Alger Midcap

The main advantage of trading using opposite Gmo Resources and Alger Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Resources 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 Gmo Resources 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.