Correlation Between Alger Smallcap and Needham Aggressive
Can any of the company-specific risk be diversified away by investing in both Alger Smallcap and Needham Aggressive 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 Needham Aggressive 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 Needham Aggressive Growth, you can compare the effects of market volatilities on Alger Smallcap and Needham Aggressive 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 Needham Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Smallcap and Needham Aggressive.
Diversification Opportunities for Alger Smallcap and Needham Aggressive
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alger and Needham is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Alger Smallcap Growth and Needham Aggressive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Needham Aggressive Growth 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 Needham Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Needham Aggressive Growth has no effect on the direction of Alger Smallcap i.e., Alger Smallcap and Needham Aggressive go up and down completely randomly.
Pair Corralation between Alger Smallcap and Needham Aggressive
Assuming the 90 days horizon Alger Smallcap Growth is expected to generate 0.92 times more return on investment than Needham Aggressive. However, Alger Smallcap Growth is 1.09 times less risky than Needham Aggressive. It trades about 0.12 of its potential returns per unit of risk. Needham Aggressive Growth is currently generating about 0.06 per unit of risk. If you would invest 1,759 in Alger Smallcap Growth on September 13, 2024 and sell it today you would earn a total of 110.00 from holding Alger Smallcap Growth or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Smallcap Growth vs. Needham Aggressive Growth
Performance |
| Timeline |
| Alger Smallcap Growth |
| Needham Aggressive Growth |
Alger Smallcap and Needham Aggressive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Smallcap and Needham Aggressive
The main advantage of trading using opposite Alger Smallcap and Needham Aggressive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Smallcap position performs unexpectedly, Needham Aggressive 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 Needham Aggressive will offset losses from the drop in Needham Aggressive's long position.| Alger Smallcap vs. Alger Midcap Growth | Alger Smallcap vs. Templeton Growth Fund | Alger Smallcap vs. Alger Capital Appreciation | Alger Smallcap vs. Janus Forty Fund |
| Needham Aggressive vs. Needham Small Cap | Needham Aggressive vs. Needham Growth Fund | Needham Aggressive vs. Needham Aggressive Growth | Needham Aggressive vs. Oberweis Micro Cap Fund |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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