Correlation Between Alger Capital and Transamerica Multi-managed
Can any of the company-specific risk be diversified away by investing in both Alger Capital and Transamerica Multi-managed 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 Transamerica Multi-managed 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 Transamerica Multi Managed Balanced, you can compare the effects of market volatilities on Alger Capital and Transamerica Multi-managed 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 Transamerica Multi-managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Capital and Transamerica Multi-managed.
Diversification Opportunities for Alger Capital and Transamerica Multi-managed
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alger and Transamerica is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Alger Capital Appreciation and Transamerica Multi Managed Bal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Multi-managed 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 Transamerica Multi-managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Multi-managed has no effect on the direction of Alger Capital i.e., Alger Capital and Transamerica Multi-managed go up and down completely randomly.
Pair Corralation between Alger Capital and Transamerica Multi-managed
Assuming the 90 days horizon Alger Capital Appreciation is expected to generate 2.53 times more return on investment than Transamerica Multi-managed. However, Alger Capital is 2.53 times more volatile than Transamerica Multi Managed Balanced. It trades about 0.14 of its potential returns per unit of risk. Transamerica Multi Managed Balanced is currently generating about 0.13 per unit of risk. If you would invest 2,539 in Alger Capital Appreciation on August 25, 2024 and sell it today you would earn a total of 1,211 from holding Alger Capital Appreciation or generate 47.7% 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. Transamerica Multi Managed Bal
Performance |
| Timeline |
| Alger Capital Apprec |
| Transamerica Multi-managed |
Alger Capital and Transamerica Multi-managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Capital and Transamerica Multi-managed
The main advantage of trading using opposite Alger Capital and Transamerica Multi-managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Capital position performs unexpectedly, Transamerica Multi-managed 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 Transamerica Multi-managed will offset losses from the drop in Transamerica Multi-managed's long position.| Alger Capital vs. Fundvantage Trust | Alger Capital vs. Rbc Bluebay Global | Alger Capital vs. Limited Term Tax | Alger Capital vs. Vanguard Global Credit |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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