Correlation Between Alger Small and Alger Spectra
Can any of the company-specific risk be diversified away by investing in both Alger Small 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 Alger Small and Alger Spectra 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 Spectra Fund, you can compare the effects of market volatilities on Alger Small 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 Alger Small with a short position of Alger Spectra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Small and Alger Spectra.
Diversification Opportunities for Alger Small and Alger Spectra
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alger and Alger is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Alger Small Cap and Alger Spectra Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Spectra 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 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 Alger Small i.e., Alger Small and Alger Spectra go up and down completely randomly.
Pair Corralation between Alger Small and Alger Spectra
Assuming the 90 days horizon Alger Small is expected to generate 2.88 times less return on investment than Alger Spectra. In addition to that, Alger Small is 1.01 times more volatile than Alger Spectra Fund. It trades about 0.04 of its total potential returns per unit of risk. Alger Spectra Fund is currently generating about 0.12 per unit of volatility. If you would invest 1,704 in Alger Spectra Fund on August 27, 2024 and sell it today you would earn a total of 1,515 from holding Alger Spectra Fund or generate 88.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Small Cap vs. Alger Spectra Fund
Performance |
| Timeline |
| Alger Small Cap |
| Alger Spectra |
Alger Small and Alger Spectra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Small and Alger Spectra
The main advantage of trading using opposite Alger Small and Alger Spectra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Small 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.| Alger Small vs. Aig Government Money | Alger Small vs. Virtus Seix Government | Alger Small vs. John Hancock Government | Alger Small vs. Blackrock Government Bond |
| Alger Spectra vs. Ab Bond Inflation | Alger Spectra vs. Aqr Managed Futures | Alger Spectra vs. Short Duration Inflation | Alger Spectra vs. Atac Inflation Rotation |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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