Correlation Between Nasdaq and Alger Capital
Can any of the company-specific risk be diversified away by investing in both Nasdaq 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 Nasdaq and Alger Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Alger Capital Appreciation, you can compare the effects of market volatilities on Nasdaq 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 Nasdaq with a short position of Alger Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Alger Capital.
Diversification Opportunities for Nasdaq and Alger Capital
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nasdaq and Alger is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc 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 Nasdaq 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 Nasdaq Inc 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 Nasdaq i.e., Nasdaq and Alger Capital go up and down completely randomly.
Pair Corralation between Nasdaq and Alger Capital
Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.8 times more return on investment than Alger Capital. However, Nasdaq Inc is 1.25 times less risky than Alger Capital. It trades about 0.03 of its potential returns per unit of risk. Alger Capital Appreciation is currently generating about -0.16 per unit of risk. If you would invest 8,234 in Nasdaq Inc on December 2, 2024 and sell it today you would earn a total of 44.00 from holding Nasdaq Inc or generate 0.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Nasdaq Inc vs. Alger Capital Appreciation
Performance |
Timeline |
Nasdaq Inc |
Alger Capital Apprec |
Nasdaq and Alger Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nasdaq and Alger Capital
The main advantage of trading using opposite Nasdaq and Alger Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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 Nasdaq Inc 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.Alger Capital vs. Alger Midcap Growth | Alger Capital vs. Alger Midcap Growth | Alger Capital vs. Alger Mid Cap | Alger Capital vs. Alger Dynamic Opportunities |
Check out your portfolio center.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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |