Correlation Between Alger Balanced and Alger Smallcap
Can any of the company-specific risk be diversified away by investing in both Alger Balanced and Alger Smallcap 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 Balanced and Alger Smallcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alger Balanced Portfolio and Alger Smallcap Growth, you can compare the effects of market volatilities on Alger Balanced and Alger Smallcap 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 Balanced with a short position of Alger Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Balanced and Alger Smallcap.
Diversification Opportunities for Alger Balanced and Alger Smallcap
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alger and Alger is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Alger Balanced Portfolio and Alger Smallcap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Smallcap Growth and Alger Balanced 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 Balanced Portfolio are associated (or correlated) with Alger Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Smallcap Growth has no effect on the direction of Alger Balanced i.e., Alger Balanced and Alger Smallcap go up and down completely randomly.
Pair Corralation between Alger Balanced and Alger Smallcap
Assuming the 90 days horizon Alger Balanced is expected to generate 4.83 times less return on investment than Alger Smallcap. But when comparing it to its historical volatility, Alger Balanced Portfolio is 2.53 times less risky than Alger Smallcap. It trades about 0.07 of its potential returns per unit of risk. Alger Smallcap Growth is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,732 in Alger Smallcap Growth on August 30, 2024 and sell it today you would earn a total of 128.00 from holding Alger Smallcap Growth or generate 7.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Balanced Portfolio vs. Alger Smallcap Growth
Performance |
| Timeline |
| Alger Balanced Portfolio |
| Alger Smallcap Growth |
Alger Balanced and Alger Smallcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Balanced and Alger Smallcap
The main advantage of trading using opposite Alger Balanced and Alger Smallcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Balanced position performs unexpectedly, Alger Smallcap 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 Smallcap will offset losses from the drop in Alger Smallcap's long position.| Alger Balanced vs. Alger Large Cap | Alger Balanced vs. Alger Growth Income | Alger Balanced vs. Select Fund C | Alger Balanced vs. Alger Capital Appreciation |
| Alger Smallcap vs. Putnam Equity Income | Alger Smallcap vs. Putnam Growth Opportunities | Alger Smallcap vs. HUMANA INC | Alger Smallcap vs. Aquagold International |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |