Correlation Between Alger Small and Alger Growth
Can any of the company-specific risk be diversified away by investing in both Alger Small 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 Small 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 Small Cap and Alger Growth Income, you can compare the effects of market volatilities on Alger Small 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 Small with a short position of Alger Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Small and Alger Growth.
Diversification Opportunities for Alger Small and Alger Growth
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alger and Alger is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Alger Small 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 Small 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 Small 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 Small i.e., Alger Small and Alger Growth go up and down completely randomly.
Pair Corralation between Alger Small and Alger Growth
Assuming the 90 days horizon Alger Small Cap is expected to generate 2.01 times more return on investment than Alger Growth. However, Alger Small is 2.01 times more volatile than Alger Growth Income. It trades about 0.16 of its potential returns per unit of risk. Alger Growth Income is currently generating about 0.08 per unit of risk. If you would invest 1,782 in Alger Small Cap on August 24, 2024 and sell it today you would earn a total of 95.00 from holding Alger Small Cap or generate 5.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Small Cap vs. Alger Growth Income
Performance |
| Timeline |
| Alger Small Cap |
| Alger Growth Income |
Alger Small and Alger Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Small and Alger Growth
The main advantage of trading using opposite Alger Small and Alger Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Small 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 Small vs. Bbh Intermediate Municipal | Alger Small vs. Victory High Income | Alger Small vs. Multisector Bond Sma | Alger Small vs. Limited Term Tax |
| Alger Growth vs. Nuveen Large Cap | Alger Growth vs. Nuveen Large Cap | Alger Growth vs. HUMANA INC | Alger Growth vs. SCOR PK |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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