Correlation Between IShares Russell and Alger ETF

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

By analyzing existing cross correlation between iShares Russell 1000 and The Alger ETF, you can compare the effects of market volatilities on IShares Russell and Alger ETF 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 IShares Russell with a short position of Alger ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and Alger ETF.

Diversification Opportunities for IShares Russell and Alger ETF

0.76

Correlation Coefficient

IShares Russell  Alger ETF

Poor diversification

The 3 months correlation between IShares and Alger is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell 1000 and The Alger ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger ETF and IShares Russell 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 iShares Russell 1000 are associated (or correlated) with Alger ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger ETF has no effect on the direction of IShares Russell i.e., IShares Russell and Alger ETF go up and down completely randomly.

Pair Corralation between IShares Russell and Alger ETF

Considering the 90-day investment horizon iShares Russell 1000 is expected to generate 0.67 times more return on investment than Alger ETF. However, iShares Russell 1000 is 1.49 times less risky than Alger ETF. It trades about -0.12 of its potential returns per unit of risk. The Alger ETF is currently generating about -0.09 per unit of risk. If you would invest  40,477  in iShares Russell 1000 on December 28, 2024 and sell it today you would lose (4,423) from holding iShares Russell 1000 or give up 10.93% of portfolio value over 90 days.

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

iShares Russell 1000  vs.  The Alger ETF

iShares Russell 1000

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Russell 1000 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Alger ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Alger ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Etf's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

Pair Trading with IShares Russell and Alger ETF

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

The idea behind iShares Russell 1000 and The Alger ETF 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 CEOs Directory module to screen CEOs from public companies around the world.