Correlation Between Alger Capital and Alger Small
Can any of the company-specific risk be diversified away by investing in both Alger Capital and Alger Small 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 Small 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 Small Cap, you can compare the effects of market volatilities on Alger Capital and Alger Small 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 Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Capital and Alger Small.
Diversification Opportunities for Alger Capital and Alger Small
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alger and Alger is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Alger Capital Appreciation and Alger Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Small Cap 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Small Cap has no effect on the direction of Alger Capital i.e., Alger Capital and Alger Small go up and down completely randomly.
Pair Corralation between Alger Capital and Alger Small
Assuming the 90 days horizon Alger Capital Appreciation is expected to generate 0.88 times more return on investment than Alger Small. However, Alger Capital Appreciation is 1.14 times less risky than Alger Small. It trades about 0.11 of its potential returns per unit of risk. Alger Small Cap is currently generating about 0.05 per unit of risk. If you would invest 2,529 in Alger Capital Appreciation on August 27, 2024 and sell it today you would earn a total of 1,539 from holding Alger Capital Appreciation or generate 60.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Capital Appreciation vs. Alger Small Cap
Performance |
| Timeline |
| Alger Capital Apprec |
| Alger Small Cap |
Alger Capital and Alger Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Capital and Alger Small
The main advantage of trading using opposite Alger Capital and Alger Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Capital position performs unexpectedly, Alger Small 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 Small will offset losses from the drop in Alger Small's long position.| Alger Capital vs. Short Precious Metals | Alger Capital vs. James Balanced Golden | Alger Capital vs. Europac Gold Fund | Alger Capital vs. Ocm Mutual Fund |
| Alger Small vs. Alger Midcap Growth | Alger Small vs. Alger Midcap Growth | Alger Small vs. Alger Mid Cap | Alger Small 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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