Correlation Between Alger Small and Alger Midcap
Can any of the company-specific risk be diversified away by investing in both Alger Small and Alger Midcap 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 Midcap 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 Midcap Growth, you can compare the effects of market volatilities on Alger Small and Alger Midcap 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 Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Small and Alger Midcap.
Diversification Opportunities for Alger Small and Alger Midcap
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alger and Alger is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Alger Small Cap and Alger Midcap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Midcap 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 Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Midcap Growth has no effect on the direction of Alger Small i.e., Alger Small and Alger Midcap go up and down completely randomly.
Pair Corralation between Alger Small and Alger Midcap
Assuming the 90 days horizon Alger Small is expected to generate 1.32 times less return on investment than Alger Midcap. In addition to that, Alger Small is 1.35 times more volatile than Alger Midcap Growth. It trades about 0.05 of its total potential returns per unit of risk. Alger Midcap Growth is currently generating about 0.08 per unit of volatility. If you would invest 636.00 in Alger Midcap Growth on August 26, 2024 and sell it today you would earn a total of 308.00 from holding Alger Midcap Growth or generate 48.43% 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 Midcap Growth
Performance |
| Timeline |
| Alger Small Cap |
| Alger Midcap Growth |
Alger Small and Alger Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Small and Alger Midcap
The main advantage of trading using opposite Alger Small and Alger Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Small position performs unexpectedly, Alger Midcap 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 Midcap will offset losses from the drop in Alger Midcap's long position.| Alger Small vs. Goldman Sachs Large | Alger Small vs. Massmutual Select T | Alger Small vs. Qs Large Cap | Alger Small vs. T Rowe Price |
| Alger Midcap vs. Alger Midcap Growth | Alger Midcap vs. Alger Mid Cap | Alger Midcap vs. Alger Small Cap | Alger Midcap 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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