Correlation Between Microsoft and Alger Global

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

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

Diversification Opportunities for Microsoft and Alger Global

0.76

Correlation Coefficient

Microsoft  Alger Global

Poor diversification

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

Pair Corralation between Microsoft and Alger Global

Given the investment horizon of 90 days Microsoft is expected to under-perform the Alger Global. In addition to that, Microsoft is 1.31 times more volatile than Alger Global Growth. It trades about -0.11 of its total potential returns per unit of risk. Alger Global Growth is currently generating about -0.11 per unit of volatility. If you would invest  2,468  in Alger Global Growth on December 29, 2024 and sell it today you would lose (199.00) from holding Alger Global Growth or give up 8.06% of portfolio value over 90 days.

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

Microsoft  vs.  Alger Global Growth

Microsoft

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Alger Global Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alger Global Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Microsoft and Alger Global

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

The idea behind Microsoft and Alger Global 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.