Correlation Between Alger Mid and Csjxx

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

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

Diversification Opportunities for Alger Mid and Csjxx

-0.77

Correlation Coefficient

Alger Mid  Csjxx

Pay attention - limited upside

The 3 months correlation between Alger and Csjxx is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Alger Mid Cap and Csjxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Csjxx and Alger Mid 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 Mid Cap are associated (or correlated) with Csjxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Csjxx has no effect on the direction of Alger Mid i.e., Alger Mid and Csjxx go up and down completely randomly.

Pair Corralation between Alger Mid and Csjxx

Assuming the 90 days horizon Alger Mid is expected to generate 15.24 times less return on investment than Csjxx. But when comparing it to its historical volatility, Alger Mid Cap is 34.8 times less risky than Csjxx. It trades about 0.15 of its potential returns per unit of risk. Csjxx is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  494.00  in Csjxx on September 29, 2024 and sell it today you would lose (394.00) from holding Csjxx or give up 79.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Alger Mid Cap  vs.  Csjxx

Alger Mid Cap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Mid Cap are ranked lower than 11 (%) 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.

Csjxx

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Csjxx are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Csjxx showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alger Mid and Csjxx

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

The idea behind Alger Mid Cap and Csjxx 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..