Correlation Between Principal Fds and Alger Spectra

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

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

Diversification Opportunities for Principal Fds and Alger Spectra

0.6

Correlation Coefficient

Principal Fds  Alger Spectra

Poor diversification

The 3 months correlation between Principal and Alger is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Principal Fds Money and Alger Spectra Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Spectra and Principal Fds 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 Principal Fds Money 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 Principal Fds i.e., Principal Fds and Alger Spectra go up and down completely randomly.

Pair Corralation between Principal Fds and Alger Spectra

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

Principal Fds Money  vs.  Alger Spectra Fund

Principal Fds Money

Risk-Adjusted Performance

Very Weak

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

Alger Spectra

Risk-Adjusted Performance

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.

Pair Trading with Principal Fds and Alger Spectra

The main advantage of trading using opposite Principal Fds and Alger Spectra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Principal Fds 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 Principal Fds Money 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.