Correlation Between Alger Small and Alger International
Can any of the company-specific risk be diversified away by investing in both Alger Small and Alger International 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 International 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 International Growth, you can compare the effects of market volatilities on Alger Small and Alger International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Small and Alger International.
Diversification Opportunities for Alger Small and Alger International
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alger and Alger is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Alger Small Cap and Alger International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger International 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 International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger International has no effect on the direction of Alger Small i.e., Alger Small and Alger International go up and down completely randomly.
Pair Corralation between Alger Small and Alger International
Assuming the 90 days horizon Alger Small Cap is expected to generate 3.06 times more return on investment than Alger International. However, Alger Small is 3.06 times more volatile than Alger International Growth. It trades about 0.32 of its potential returns per unit of risk. Alger International Growth is currently generating about -0.24 per unit of risk. If you would invest 1,974 in Alger Small Cap on August 27, 2024 and sell it today you would earn a total of 249.00 from holding Alger Small Cap or generate 12.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Small Cap vs. Alger International Growth
Performance |
| Timeline |
| Alger Small Cap |
| Alger International |
Alger Small and Alger International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Small and Alger International
The main advantage of trading using opposite Alger Small and Alger International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Small position performs unexpectedly, Alger International 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 International will offset losses from the drop in Alger International'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 International vs. Alger Midcap Growth | Alger International vs. Alger Midcap Growth | Alger International vs. Alger Mid Cap | Alger International 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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