Correlation Between Alger Small and Alger 35
Can any of the company-specific risk be diversified away by investing in both Alger Small and Alger 35 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 Small and Alger 35 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alger Small Cap and Alger 35 Fund, you can compare the effects of market volatilities on Alger Small and Alger 35 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 Small with a short position of Alger 35. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Small and Alger 35.
Diversification Opportunities for Alger Small and Alger 35
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alger and Alger is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Alger Small Cap and Alger 35 Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger 35 Fund and Alger Small 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 Small Cap are associated (or correlated) with Alger 35. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger 35 Fund has no effect on the direction of Alger Small i.e., Alger Small and Alger 35 go up and down completely randomly.
Pair Corralation between Alger Small and Alger 35
Assuming the 90 days horizon Alger Small Cap is expected to generate 1.2 times more return on investment than Alger 35. However, Alger Small is 1.2 times more volatile than Alger 35 Fund. It trades about 0.3 of its potential returns per unit of risk. Alger 35 Fund is currently generating about 0.3 per unit of risk. If you would invest 1,868 in Alger Small Cap on August 31, 2024 and sell it today you would earn a total of 222.00 from holding Alger Small Cap or generate 11.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Small Cap vs. Alger 35 Fund
Performance |
| Timeline |
| Alger Small Cap |
| Alger 35 Fund |
Alger Small and Alger 35 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Small and Alger 35
The main advantage of trading using opposite Alger Small and Alger 35 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Small position performs unexpectedly, Alger 35 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 35 will offset losses from the drop in Alger 35's long position.| Alger Small vs. Arrow Managed Futures | Alger Small vs. Fa 529 Aggressive | Alger Small vs. Leggmason Partners Institutional | Alger Small vs. Falcon Focus Scv |
| Alger 35 vs. American Funds Retirement | Alger 35 vs. Target Retirement 2040 | Alger 35 vs. Moderately Aggressive Balanced | Alger 35 vs. Lifestyle Ii Moderate |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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