Correlation Between Alger Large and Alger Growth
Can any of the company-specific risk be diversified away by investing in both Alger Large and Alger Growth 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 Large and Alger Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alger Large Cap and Alger Growth Income, you can compare the effects of market volatilities on Alger Large and Alger Growth 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 Large with a short position of Alger Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Large and Alger Growth.
Diversification Opportunities for Alger Large and Alger Growth
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alger and Alger is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Alger Large Cap and Alger Growth Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Growth Income and Alger 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 Alger Large Cap are associated (or correlated) with Alger Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Growth Income has no effect on the direction of Alger Large i.e., Alger Large and Alger Growth go up and down completely randomly.
Pair Corralation between Alger Large and Alger Growth
Assuming the 90 days horizon Alger Large Cap is expected to generate 1.66 times more return on investment than Alger Growth. However, Alger Large is 1.66 times more volatile than Alger Growth Income. It trades about 0.11 of its potential returns per unit of risk. Alger Growth Income is currently generating about 0.12 per unit of risk. If you would invest 5,801 in Alger Large Cap on September 2, 2024 and sell it today you would earn a total of 3,177 from holding Alger Large Cap or generate 54.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Large Cap vs. Alger Growth Income
Performance |
| Timeline |
| Alger Large Cap |
| Alger Growth Income |
Alger Large and Alger Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Large and Alger Growth
The main advantage of trading using opposite Alger Large and Alger Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Large position performs unexpectedly, Alger Growth 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 Growth will offset losses from the drop in Alger Growth's long position.| Alger Large vs. Transamerica Emerging Markets | Alger Large vs. Doubleline Emerging Markets | Alger Large vs. Franklin Emerging Market | Alger Large vs. Pnc Emerging Markets |
| Alger Growth vs. The Gamco Global | Alger Growth vs. Virtus Convertible | Alger Growth vs. Harbor Vertible Securities | Alger Growth vs. Advent Claymore Convertible |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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