Correlation Between Alger Global and Alger Small
Can any of the company-specific risk be diversified away by investing in both Alger Global 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 Global 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 Global Growth and Alger Small Cap, you can compare the effects of market volatilities on Alger Global 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 Global with a short position of Alger Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Global and Alger Small.
Diversification Opportunities for Alger Global and Alger Small
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ALGER and Alger is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Alger Global Growth 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 Global 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 Global Growth 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 Global i.e., Alger Global and Alger Small go up and down completely randomly.
Pair Corralation between Alger Global and Alger Small
Assuming the 90 days horizon Alger Global Growth is expected to generate 0.67 times more return on investment than Alger Small. However, Alger Global Growth is 1.49 times less risky than Alger Small. It trades about 0.09 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 2,544 in Alger Global Growth on August 27, 2024 and sell it today you would earn a total of 922.00 from holding Alger Global Growth or generate 36.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Global Growth vs. Alger Small Cap
Performance |
| Timeline |
| Alger Global Growth |
| Alger Small Cap |
Alger Global and Alger Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Global and Alger Small
The main advantage of trading using opposite Alger Global and Alger Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Global 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 Global vs. Transamerica Emerging Markets | Alger Global vs. Dws Emerging Markets | Alger Global vs. Franklin Emerging Market | Alger Global vs. Ashmore Emerging Markets |
| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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