Correlation Between Alger Dynamic and Alger International

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

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

Diversification Opportunities for Alger Dynamic and Alger International

0.05

Correlation Coefficient

Alger Dynamic  Alger International

Significant diversification

The 3 months correlation between Alger and Alger is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Alger Dynamic Opportunities and Alger International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger International and Alger Dynamic 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 Alger Dynamic Opportunities are associated (or correlated) with Alger International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger International has no effect on the direction of Alger Dynamic i.e., Alger Dynamic and Alger International go up and down completely randomly.

Pair Corralation between Alger Dynamic and Alger International

Assuming the 90 days horizon Alger Dynamic Opportunities is expected to under-perform the Alger International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Alger Dynamic Opportunities is 1.09 times less risky than Alger International. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Alger International Growth is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  2,027  in Alger International Growth on December 1, 2024 and sell it today you would lose (69.00) from holding Alger International Growth or give up 3.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Alger Dynamic Opportunities  vs.  Alger International Growth

Alger Dynamic Opport

Risk-Adjusted Performance

Very Weak

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

Alger International

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Alger Dynamic and Alger International

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

The idea behind Alger Dynamic Opportunities and Alger International 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.