Correlation Between Alger Capital and Hennessy Technology
Can any of the company-specific risk be diversified away by investing in both Alger Capital and Hennessy Technology 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 Hennessy Technology 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 Hennessy Technology Fund, you can compare the effects of market volatilities on Alger Capital and Hennessy Technology 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 Hennessy Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Capital and Hennessy Technology.
Diversification Opportunities for Alger Capital and Hennessy Technology
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alger and Hennessy is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Alger Capital Appreciation and Hennessy Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Technology 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 Hennessy Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Technology has no effect on the direction of Alger Capital i.e., Alger Capital and Hennessy Technology go up and down completely randomly.
Pair Corralation between Alger Capital and Hennessy Technology
Assuming the 90 days horizon Alger Capital Appreciation is expected to generate 1.07 times more return on investment than Hennessy Technology. However, Alger Capital is 1.07 times more volatile than Hennessy Technology Fund. It trades about 0.12 of its potential returns per unit of risk. Hennessy Technology Fund is currently generating about 0.08 per unit of risk. If you would invest 1,689 in Alger Capital Appreciation on August 29, 2024 and sell it today you would earn a total of 378.00 from holding Alger Capital Appreciation or generate 22.38% 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. Hennessy Technology Fund
Performance |
| Timeline |
| Alger Capital Apprec |
| Hennessy Technology |
Alger Capital and Hennessy Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Capital and Hennessy Technology
The main advantage of trading using opposite Alger Capital and Hennessy Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Capital position performs unexpectedly, Hennessy Technology 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 Hennessy Technology will offset losses from the drop in Hennessy Technology's long position.| Alger Capital vs. Growth Fund Of | Alger Capital vs. HUMANA INC | Alger Capital vs. Aquagold International | Alger Capital vs. Barloworld Ltd ADR |
| Hennessy Technology vs. Black Oak Emerging | Hennessy Technology vs. Hennessy Large Cap | Hennessy Technology vs. Hennessy Japan Fund | Hennessy Technology vs. Hennessy Small Cap |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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