Correlation Between Alger Mid and Alger Concentrated
Can any of the company-specific risk be diversified away by investing in both Alger Mid and Alger Concentrated 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 Concentrated 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 Concentrated Equity, you can compare the effects of market volatilities on Alger Mid and Alger Concentrated 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 Concentrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Mid and Alger Concentrated.
Diversification Opportunities for Alger Mid and Alger Concentrated
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Alger and Alger is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Alger Mid Cap and Alger Concentrated Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Concentrated Equity 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 Concentrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Concentrated Equity has no effect on the direction of Alger Mid i.e., Alger Mid and Alger Concentrated go up and down completely randomly.
Pair Corralation between Alger Mid and Alger Concentrated
Assuming the 90 days horizon Alger Mid Cap is expected to generate 0.92 times more return on investment than Alger Concentrated. However, Alger Mid Cap is 1.08 times less risky than Alger Concentrated. It trades about 0.36 of its potential returns per unit of risk. Alger Concentrated Equity is currently generating about 0.22 per unit of risk. If you would invest 1,977 in Alger Mid Cap on August 28, 2024 and sell it today you would earn a total of 196.00 from holding Alger Mid Cap or generate 9.91% 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 Concentrated Equity
Performance |
| Timeline |
| Alger Mid Cap |
| Alger Concentrated Equity |
Alger Mid and Alger Concentrated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Mid and Alger Concentrated
The main advantage of trading using opposite Alger Mid and Alger Concentrated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Mid position performs unexpectedly, Alger Concentrated 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 Concentrated will offset losses from the drop in Alger Concentrated's long position.| Alger Mid vs. Victory Rs Partners | Alger Mid vs. Ultramid Cap Profund Ultramid Cap | Alger Mid vs. Pace Smallmedium Value | Alger Mid vs. Amg River Road |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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