Correlation Between Alger Mid and Value Line

Can any of the company-specific risk be diversified away by investing in both Alger Mid and Value Line 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 Value Line 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 Value Line Income, you can compare the effects of market volatilities on Alger Mid and Value Line 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 Value Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Mid and Value Line.

Diversification Opportunities for Alger Mid and Value Line

0.99

Correlation Coefficient

Alger Mid  Value Line

No risk reduction

The 3 months correlation between Alger and Value is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Alger Mid Cap and Value Line Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Line Income 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 Value Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Line Income has no effect on the direction of Alger Mid i.e., Alger Mid and Value Line go up and down completely randomly.

Pair Corralation between Alger Mid and Value Line

Assuming the 90 days horizon Alger Mid Cap is expected to generate 1.24 times more return on investment than Value Line. However, Alger Mid is 1.24 times more volatile than Value Line Income. It trades about 0.13 of its potential returns per unit of risk. Value Line Income is currently generating about 0.13 per unit of risk. If you would invest  1,587  in Alger Mid Cap on September 2, 2024 and sell it today you would earn a total of  593.00  from holding Alger Mid Cap or generate 37.37% return on investment over 90 days.

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

Alger Mid Cap  vs.  Value Line Income

Alger Mid Cap

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Mid Cap are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Alger Mid showed solid returns over the last few months and may actually be approaching a breakup point.

Value Line Income

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Value Line Income are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Value Line showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alger Mid and Value Line

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

The idea behind Alger Mid Cap and Value Line Income 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.