Correlation Between Alger Small and Virtus Kar
Can any of the company-specific risk be diversified away by investing in both Alger Small and Virtus Kar 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 Virtus Kar 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 Virtus Kar Small Cap, you can compare the effects of market volatilities on Alger Small and Virtus Kar 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 Virtus Kar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Small and Virtus Kar.
Diversification Opportunities for Alger Small and Virtus Kar
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alger and Virtus is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Alger Small Cap and Virtus Kar Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Kar Small 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 Virtus Kar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Kar Small has no effect on the direction of Alger Small i.e., Alger Small and Virtus Kar go up and down completely randomly.
Pair Corralation between Alger Small and Virtus Kar
Assuming the 90 days horizon Alger Small Cap is expected to generate 1.14 times more return on investment than Virtus Kar. However, Alger Small is 1.14 times more volatile than Virtus Kar Small Cap. It trades about 0.33 of its potential returns per unit of risk. Virtus Kar Small Cap is currently generating about 0.23 per unit of risk. If you would invest 1,847 in Alger Small Cap on August 29, 2024 and sell it today you would earn a total of 259.00 from holding Alger Small Cap or generate 14.02% 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. Virtus Kar Small Cap
Performance |
| Timeline |
| Alger Small Cap |
| Virtus Kar Small |
Alger Small and Virtus Kar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Small and Virtus Kar
The main advantage of trading using opposite Alger Small and Virtus Kar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Small position performs unexpectedly, Virtus Kar 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 Virtus Kar will offset losses from the drop in Virtus Kar's long position.| Alger Small vs. Alger Midcap Growth | Alger Small vs. Alger Midcap Growth | Alger Small vs. Alger Mid Cap | Alger Small vs. Alger Dynamic Opportunities |
| Virtus Kar vs. Virtus Kar Mid Cap | Virtus Kar vs. Global Opportunity Portfolio | Virtus Kar vs. Virtus Kar Small Cap | Virtus Kar vs. Alger Small Cap |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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