Correlation Between Dow Jones and Alger Spectra
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Alger Spectra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Alger Spectra Fund, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Alger Spectra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Alger Spectra.
Diversification Opportunities for Dow Jones and Alger Spectra
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Alger is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Alger Spectra Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Spectra and Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and Alger Spectra go up and down completely randomly.
Pair Corralation between Dow Jones and Alger Spectra
Assuming the 90 days trading horizon Dow Jones is expected to generate 16.06 times less return on investment than Alger Spectra. But when comparing it to its historical volatility, Dow Jones Industrial is 1.57 times less risky than Alger Spectra. It trades about 0.01 of its potential returns per unit of risk. Alger Spectra Fund is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,111 in Alger Spectra Fund on March 25, 2025 and sell it today you would earn a total of 252.00 from holding Alger Spectra Fund or generate 11.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.41% |
| Values | Daily Returns |
Dow Jones Industrial vs. Alger Spectra Fund
Performance |
| Timeline |
Dow Jones and Alger Spectra Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Alger Spectra Fund
Pair trading matchups for Alger Spectra
Pair Trading with Dow Jones and Alger Spectra
The main advantage of trading using opposite Dow Jones and Alger Spectra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Eldorado Gold Corp | Dow Jones vs. Denison Mines Corp | Dow Jones vs. Weyco Group | Dow Jones vs. Timken Company |
| Alger Spectra vs. Lifestyle Ii Moderate | Alger Spectra vs. Target Retirement Income | Alger Spectra vs. American Funds Retirement | Alger Spectra vs. Wealthbuilder Moderate Balanced |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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