Correlation Between Nationwide Growth and Alger Funds

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

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

Diversification Opportunities for Nationwide Growth and Alger Funds

0.96

Correlation Coefficient

Nationwide Growth  Alger Funds

Almost no diversification

The 3 months correlation between Nationwide and Alger is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Growth Fund and The Alger Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Funds and Nationwide Growth 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 Nationwide Growth Fund are associated (or correlated) with Alger Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Funds has no effect on the direction of Nationwide Growth i.e., Nationwide Growth and Alger Funds go up and down completely randomly.

Pair Corralation between Nationwide Growth and Alger Funds

Assuming the 90 days horizon Nationwide Growth is expected to generate 1.77 times less return on investment than Alger Funds. But when comparing it to its historical volatility, Nationwide Growth Fund is 1.94 times less risky than Alger Funds. It trades about 0.17 of its potential returns per unit of risk. The Alger Funds is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,052  in The Alger Funds on September 12, 2024 and sell it today you would earn a total of  134.00  from holding The Alger Funds or generate 12.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Nationwide Growth Fund  vs.  The Alger Funds

Nationwide Growth

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Growth Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Nationwide Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Alger Funds

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Alger Funds are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Alger Funds may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nationwide Growth and Alger Funds

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

The idea behind Nationwide Growth Fund and The Alger Funds 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.