Correlation Between Jpmorgan Mid and Alger Capital

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

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

Diversification Opportunities for Jpmorgan Mid and Alger Capital

0.91

Correlation Coefficient

Jpmorgan Mid  Alger Capital

Almost no diversification

The 3 months correlation between Jpmorgan and Alger is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Mid Cap and Alger Capital Appreciation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Capital Apprec and Jpmorgan Mid 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 Jpmorgan Mid Cap are associated (or correlated) with Alger Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Capital Apprec has no effect on the direction of Jpmorgan Mid i.e., Jpmorgan Mid and Alger Capital go up and down completely randomly.

Pair Corralation between Jpmorgan Mid and Alger Capital

Assuming the 90 days horizon Jpmorgan Mid is expected to generate 2.98 times less return on investment than Alger Capital. But when comparing it to its historical volatility, Jpmorgan Mid Cap is 1.5 times less risky than Alger Capital. It trades about 0.13 of its potential returns per unit of risk. Alger Capital Appreciation is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  3,293  in Alger Capital Appreciation on September 13, 2024 and sell it today you would earn a total of  632.00  from holding Alger Capital Appreciation or generate 19.19% return on investment over 90 days.

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

Jpmorgan Mid Cap  vs.  Alger Capital Appreciation

Jpmorgan Mid Cap

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Mid Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Jpmorgan Mid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alger Capital Apprec

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Capital Appreciation are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Alger Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jpmorgan Mid and Alger Capital

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

The idea behind Jpmorgan Mid Cap and Alger Capital Appreciation 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.