Correlation Between Vanguard Information and Alger ETF

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

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

Diversification Opportunities for Vanguard Information and Alger ETF

0.96

Correlation Coefficient

Vanguard Information  Alger ETF

Almost no diversification

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

Pair Corralation between Vanguard Information and Alger ETF

Considering the 90-day investment horizon Vanguard Information is expected to generate 1.7 times less return on investment than Alger ETF. But when comparing it to its historical volatility, Vanguard Information Technology is 1.02 times less risky than Alger ETF. It trades about 0.17 of its potential returns per unit of risk. The Alger ETF is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  2,102  in The Alger ETF on September 1, 2024 and sell it today you would earn a total of  525.00  from holding The Alger ETF or generate 24.98% return on investment over 90 days.

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

Vanguard Information Technolog  vs.  The Alger ETF

Vanguard Information

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Information Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Vanguard Information unveiled solid returns over the last few months and may actually be approaching a breakup point.

Alger ETF

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Alger ETF are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, Alger ETF demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanguard Information and Alger ETF

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

The idea behind Vanguard Information Technology and The Alger ETF 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.