Correlation Between Alger Smallcap and Alger Capital
Can any of the company-specific risk be diversified away by investing in both Alger Smallcap and Alger Capital 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 Smallcap and Alger Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alger Smallcap Growth and Alger Capital Appreciation, you can compare the effects of market volatilities on Alger Smallcap and Alger Capital 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 Smallcap with a short position of Alger Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Smallcap and Alger Capital.
Diversification Opportunities for Alger Smallcap and Alger Capital
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alger and Alger is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Alger Smallcap Growth and Alger Capital Appreciation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Capital Apprec and Alger Smallcap 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 Smallcap Growth are associated (or correlated) with Alger Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Capital Apprec has no effect on the direction of Alger Smallcap i.e., Alger Smallcap and Alger Capital go up and down completely randomly.
Pair Corralation between Alger Smallcap and Alger Capital
Assuming the 90 days horizon Alger Smallcap Growth is expected to generate 1.14 times more return on investment than Alger Capital. However, Alger Smallcap is 1.14 times more volatile than Alger Capital Appreciation. It trades about 0.22 of its potential returns per unit of risk. Alger Capital Appreciation is currently generating about 0.18 per unit of risk. If you would invest 1,726 in Alger Smallcap Growth on August 30, 2024 and sell it today you would earn a total of 134.00 from holding Alger Smallcap Growth or generate 7.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Smallcap Growth vs. Alger Capital Appreciation
Performance |
| Timeline |
| Alger Smallcap Growth |
| Alger Capital Apprec |
Alger Smallcap and Alger Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Smallcap and Alger Capital
The main advantage of trading using opposite Alger Smallcap and Alger Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Smallcap position performs unexpectedly, Alger Capital 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 Capital will offset losses from the drop in Alger Capital's long position.| Alger Smallcap vs. Putnam Equity Income | Alger Smallcap vs. Putnam Growth Opportunities | Alger Smallcap vs. HUMANA INC | Alger Smallcap vs. Aquagold International |
| Alger Capital vs. Growth Fund Of | Alger Capital vs. HUMANA INC | Alger Capital vs. Aquagold International | Alger Capital vs. Barloworld Ltd ADR |
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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