Correlation Between M Large and Alger Spectra

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Can any of the company-specific risk be diversified away by investing in both M Large and Alger Spectra 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 M Large and Alger Spectra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between M Large Cap and Alger Spectra Fund, you can compare the effects of market volatilities on M Large and Alger Spectra 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 M Large with a short position of Alger Spectra. Check out your portfolio center. Please also check ongoing floating volatility patterns of M Large and Alger Spectra.

Diversification Opportunities for M Large and Alger Spectra

0.49
  Correlation Coefficient

Very weak diversification

The 3 months correlation between MTCGX and Alger is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding M Large Cap and Alger Spectra Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Spectra and M Large 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 M Large Cap are associated (or correlated) with Alger Spectra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Spectra has no effect on the direction of M Large i.e., M Large and Alger Spectra go up and down completely randomly.

Pair Corralation between M Large and Alger Spectra

Assuming the 90 days horizon M Large is expected to generate 1.42 times less return on investment than Alger Spectra. But when comparing it to its historical volatility, M Large Cap is 1.17 times less risky than Alger Spectra. It trades about 0.27 of its potential returns per unit of risk. Alger Spectra Fund is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  2,737  in Alger Spectra Fund on May 2, 2025 and sell it today you would earn a total of  644.00  from holding Alger Spectra Fund or generate 23.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

M Large Cap  vs.  Alger Spectra Fund

 Performance 
       Timeline  
M Large Cap 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in M Large Cap are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, M Large showed solid returns over the last few months and may actually be approaching a breakup point.
Alger Spectra 

Risk-Adjusted Performance

Solid

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

M Large and Alger Spectra Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with M Large and Alger Spectra

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

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