Correlation Between Alger Small and Alger Global
Can any of the company-specific risk be diversified away by investing in both Alger Small and Alger Global 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 Global 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 Global Growth, you can compare the effects of market volatilities on Alger Small and Alger Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Small and Alger Global.
Diversification Opportunities for Alger Small and Alger Global
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alger and ALGER is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Alger Small Cap and Alger Global Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Global Growth 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 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Global Growth has no effect on the direction of Alger Small i.e., Alger Small and Alger Global go up and down completely randomly.
Pair Corralation between Alger Small and Alger Global
Assuming the 90 days horizon Alger Small Cap is expected to generate 1.5 times more return on investment than Alger Global. However, Alger Small is 1.5 times more volatile than Alger Global Growth. It trades about 0.1 of its potential returns per unit of risk. Alger Global Growth is currently generating about 0.09 per unit of risk. If you would invest 1,808 in Alger Small Cap on August 29, 2024 and sell it today you would earn a total of 354.00 from holding Alger Small Cap or generate 19.58% 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 Global Growth
Performance |
| Timeline |
| Alger Small Cap |
| Alger Global Growth |
Alger Small and Alger Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Small and Alger Global
The main advantage of trading using opposite Alger Small and Alger Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Small position performs unexpectedly, Alger Global 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 Global will offset losses from the drop in Alger Global's long position.| Alger Small vs. Lord Abbett Inflation | Alger Small vs. Ab Bond Inflation | Alger Small vs. Ab Municipal Bond | Alger Small vs. American Funds Inflation |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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