Correlation Between Alger Small and Alger Balanced
Can any of the company-specific risk be diversified away by investing in both Alger Small and Alger Balanced 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 Balanced 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 Balanced Portfolio, you can compare the effects of market volatilities on Alger Small and Alger Balanced 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 Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Small and Alger Balanced.
Diversification Opportunities for Alger Small and Alger Balanced
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alger and Alger is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Alger Small Cap and Alger Balanced Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Balanced Portfolio 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 Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Balanced Portfolio has no effect on the direction of Alger Small i.e., Alger Small and Alger Balanced go up and down completely randomly.
Pair Corralation between Alger Small and Alger Balanced
Assuming the 90 days horizon Alger Small Cap is expected to generate 3.11 times more return on investment than Alger Balanced. However, Alger Small is 3.11 times more volatile than Alger Balanced Portfolio. It trades about 0.35 of its potential returns per unit of risk. Alger Balanced Portfolio is currently generating about 0.08 per unit of risk. If you would invest 1,911 in Alger Small Cap on August 27, 2024 and sell it today you would earn a total of 266.00 from holding Alger Small Cap or generate 13.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Small Cap vs. Alger Balanced Portfolio
Performance |
| Timeline |
| Alger Small Cap |
| Alger Balanced Portfolio |
Alger Small and Alger Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Small and Alger Balanced
The main advantage of trading using opposite Alger Small and Alger Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Small position performs unexpectedly, Alger Balanced 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 Balanced will offset losses from the drop in Alger Balanced'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 Global Growth |
| Alger Balanced vs. Alger Large Cap | Alger Balanced vs. Alger Growth Income | Alger Balanced vs. Select Fund C | Alger Balanced vs. Alger Capital Appreciation |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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