Correlation Between Alger Mid and Alger Small
Can any of the company-specific risk be diversified away by investing in both Alger Mid 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 Mid 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 Mid Cap and Alger Small Cap, you can compare the effects of market volatilities on Alger Mid 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 Mid with a short position of Alger Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Mid and Alger Small.
Diversification Opportunities for Alger Mid and Alger Small
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alger and Alger is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Alger Mid Cap 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 Mid 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 Mid Cap 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 Mid i.e., Alger Mid and Alger Small go up and down completely randomly.
Pair Corralation between Alger Mid and Alger Small
Assuming the 90 days horizon Alger Mid is expected to generate 1.01 times less return on investment than Alger Small. But when comparing it to its historical volatility, Alger Mid Cap is 1.39 times less risky than Alger Small. It trades about 0.13 of its potential returns per unit of risk. Alger Small Cap is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,511 in Alger Small Cap on August 29, 2024 and sell it today you would earn a total of 288.00 from holding Alger Small Cap or generate 19.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Mid Cap vs. Alger Small Cap
Performance |
| Timeline |
| Alger Mid Cap |
| Alger Small Cap |
Alger Mid and Alger Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Mid and Alger Small
The main advantage of trading using opposite Alger Mid and Alger Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Mid 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 Mid vs. Gamco Natural Resources | Alger Mid vs. Gmo Resources | Alger Mid vs. Energy Services Fund | Alger Mid vs. Jennison Natural Resources |
| Alger Small vs. Putnam Equity Income | Alger Small vs. Putnam Growth Opportunities | Alger Small vs. HUMANA INC | Alger Small vs. Aquagold International |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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