Correlation Between Alger Small and Alger Concentrated
Can any of the company-specific risk be diversified away by investing in both Alger Small and Alger Concentrated 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 Concentrated 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 Concentrated Equity, you can compare the effects of market volatilities on Alger Small and Alger Concentrated 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 Concentrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Small and Alger Concentrated.
Diversification Opportunities for Alger Small and Alger Concentrated
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alger and Alger is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Alger Small Cap and Alger Concentrated Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Concentrated Equity 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 Concentrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Concentrated Equity has no effect on the direction of Alger Small i.e., Alger Small and Alger Concentrated go up and down completely randomly.
Pair Corralation between Alger Small and Alger Concentrated
Assuming the 90 days horizon Alger Small is expected to generate 1.35 times less return on investment than Alger Concentrated. In addition to that, Alger Small is 1.14 times more volatile than Alger Concentrated Equity. It trades about 0.16 of its total potential returns per unit of risk. Alger Concentrated Equity is currently generating about 0.24 per unit of volatility. If you would invest 1,200 in Alger Concentrated Equity on August 24, 2024 and sell it today you would earn a total of 85.00 from holding Alger Concentrated Equity or generate 7.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Alger Small Cap vs. Alger Concentrated Equity
Performance |
| Timeline |
| Alger Small Cap |
| Alger Concentrated Equity |
Alger Small and Alger Concentrated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Small and Alger Concentrated
The main advantage of trading using opposite Alger Small and Alger Concentrated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Small position performs unexpectedly, Alger Concentrated 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 Concentrated will offset losses from the drop in Alger Concentrated'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 Concentrated vs. Alger Midcap Growth | Alger Concentrated vs. Alger Midcap Growth | Alger Concentrated vs. Alger Mid Cap | Alger Concentrated vs. Alger Dynamic Opportunities |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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