Correlation Between Alger Emerging and Alger Small
Can any of the company-specific risk be diversified away by investing in both Alger Emerging and Alger Small 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 Emerging and Alger Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alger Emerging Markets and Alger Small Cap, you can compare the effects of market volatilities on Alger Emerging and Alger Small 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 Emerging with a short position of Alger Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Emerging and Alger Small.
Diversification Opportunities for Alger Emerging and Alger Small
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alger and Alger is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Alger Emerging Markets and Alger Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Small Cap and Alger Emerging 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 Emerging Markets are associated (or correlated) with Alger Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Small Cap has no effect on the direction of Alger Emerging i.e., Alger Emerging and Alger Small go up and down completely randomly.
Pair Corralation between Alger Emerging and Alger Small
Assuming the 90 days horizon Alger Emerging Markets is expected to generate 0.61 times more return on investment than Alger Small. However, Alger Emerging Markets is 1.64 times less risky than Alger Small. It trades about 0.13 of its potential returns per unit of risk. Alger Small Cap is currently generating about 0.05 per unit of risk. If you would invest 1,066 in Alger Emerging Markets on November 2, 2024 and sell it today you would earn a total of 25.00 from holding Alger Emerging Markets or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Alger Emerging Markets vs. Alger Small Cap
Performance |
| Timeline |
| Alger Emerging Markets |
| Alger Small Cap |
Alger Emerging and Alger Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Emerging and Alger Small
The main advantage of trading using opposite Alger Emerging and Alger Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Emerging position performs unexpectedly, Alger Small 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 Small will offset losses from the drop in Alger Small's long position.| Alger Emerging vs. Amg Managers Centersquare | Alger Emerging vs. Tiaa Cref Real Estate | Alger Emerging vs. Nexpoint Real Estate | Alger Emerging vs. Fidelity Real Estate |
| Alger Small vs. Madison Diversified Income | Alger Small vs. Jhancock Diversified Macro | Alger Small vs. Schwab Small Cap Index | Alger Small vs. Davenport Small Cap |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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