Correlation Between Alger Capital and Alger Smidcap
Can any of the company-specific risk be diversified away by investing in both Alger Capital and Alger Smidcap 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 Smidcap 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 Smidcap Focus, you can compare the effects of market volatilities on Alger Capital and Alger Smidcap 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 Smidcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Capital and Alger Smidcap.
Diversification Opportunities for Alger Capital and Alger Smidcap
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alger and Alger is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Alger Capital Appreciation and Alger Smidcap Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Smidcap Focus 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 Smidcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Smidcap Focus has no effect on the direction of Alger Capital i.e., Alger Capital and Alger Smidcap go up and down completely randomly.
Pair Corralation between Alger Capital and Alger Smidcap
Assuming the 90 days horizon Alger Capital is expected to generate 1.37 times less return on investment than Alger Smidcap. But when comparing it to its historical volatility, Alger Capital Appreciation is 1.27 times less risky than Alger Smidcap. It trades about 0.27 of its potential returns per unit of risk. Alger Smidcap Focus is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,455 in Alger Smidcap Focus on August 26, 2024 and sell it today you would earn a total of 159.00 from holding Alger Smidcap Focus or generate 10.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Capital Appreciation vs. Alger Smidcap Focus
Performance |
| Timeline |
| Alger Capital Apprec |
| Alger Smidcap Focus |
Alger Capital and Alger Smidcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Capital and Alger Smidcap
The main advantage of trading using opposite Alger Capital and Alger Smidcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Capital position performs unexpectedly, Alger Smidcap 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 Smidcap will offset losses from the drop in Alger Smidcap's long position.| Alger Capital vs. Alger Small Cap | Alger Capital vs. Alger Smidcap Focus | Alger Capital vs. Alger Capital Appreciation | Alger Capital vs. Alger Capital Appreciation |
| Alger Smidcap vs. Alger Health Sciences | Alger Smidcap vs. Lord Abbett Health | Alger Smidcap vs. Alphacentric Lifesci Healthcare | Alger Smidcap vs. Highland Longshort Healthcare |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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