Correlation Between Alger Capital and Alger Weatherbie
Can any of the company-specific risk be diversified away by investing in both Alger Capital and Alger Weatherbie 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 Capital and Alger Weatherbie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alger Capital Appreciation and Alger Weatherbie Specialized, you can compare the effects of market volatilities on Alger Capital and Alger Weatherbie 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 Capital with a short position of Alger Weatherbie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Capital and Alger Weatherbie.
Diversification Opportunities for Alger Capital and Alger Weatherbie
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alger and Alger is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Alger Capital Appreciation and Alger Weatherbie Specialized in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Weatherbie Spe and Alger Capital 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 Capital Appreciation are associated (or correlated) with Alger Weatherbie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Weatherbie Spe has no effect on the direction of Alger Capital i.e., Alger Capital and Alger Weatherbie go up and down completely randomly.
Pair Corralation between Alger Capital and Alger Weatherbie
Assuming the 90 days horizon Alger Capital is expected to generate 1.77 times less return on investment than Alger Weatherbie. But when comparing it to its historical volatility, Alger Capital Appreciation is 1.21 times less risky than Alger Weatherbie. It trades about 0.22 of its potential returns per unit of risk. Alger Weatherbie Specialized is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 1,425 in Alger Weatherbie Specialized on August 28, 2024 and sell it today you would earn a total of 166.00 from holding Alger Weatherbie Specialized or generate 11.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Capital Appreciation vs. Alger Weatherbie Specialized
Performance |
| Timeline |
| Alger Capital Apprec |
| Alger Weatherbie Spe |
Alger Capital and Alger Weatherbie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Capital and Alger Weatherbie
The main advantage of trading using opposite Alger Capital and Alger Weatherbie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Capital position performs unexpectedly, Alger Weatherbie 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 Weatherbie will offset losses from the drop in Alger Weatherbie's long position.| Alger Capital vs. Angel Oak Financial | Alger Capital vs. Mesirow Financial Small | Alger Capital vs. Davis Financial Fund | Alger Capital vs. Icon Financial Fund |
| Alger Weatherbie vs. Alger Midcap Growth | Alger Weatherbie vs. Alger Midcap Growth | Alger Weatherbie vs. Alger Mid Cap | Alger Weatherbie vs. Alger Global Growth |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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