Correlation Between Allianzgi Nfj and Alger Mid

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

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

Diversification Opportunities for Allianzgi Nfj and Alger Mid

0.7

Correlation Coefficient

Allianzgi Nfj  Alger Mid

Poor diversification

The 3 months correlation between Allianzgi and Alger is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Allianzgi Nfj Small Cap and Alger Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Mid Cap and Allianzgi Nfj 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 Allianzgi Nfj Small Cap are associated (or correlated) with Alger Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Mid Cap has no effect on the direction of Allianzgi Nfj i.e., Allianzgi Nfj and Alger Mid go up and down completely randomly.

Pair Corralation between Allianzgi Nfj and Alger Mid

Assuming the 90 days horizon Allianzgi Nfj Small Cap is expected to under-perform the Alger Mid. In addition to that, Allianzgi Nfj is 1.09 times more volatile than Alger Mid Cap. It trades about -0.06 of its total potential returns per unit of risk. Alger Mid Cap is currently generating about 0.16 per unit of volatility. If you would invest  1,599  in Alger Mid Cap on September 23, 2024 and sell it today you would earn a total of  235.00  from holding Alger Mid Cap or generate 14.7% return on investment over 90 days.

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

Allianzgi Nfj Small Cap  vs.  Alger Mid Cap

Allianzgi Nfj Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allianzgi Nfj Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Allianzgi Nfj is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alger Mid Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Mid Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Alger Mid showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allianzgi Nfj and Alger Mid

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

The idea behind Allianzgi Nfj Small Cap and Alger Mid Cap 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.