Correlation Between Alger Small and Aqr Large
Can any of the company-specific risk be diversified away by investing in both Alger Small and Aqr Large 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 Aqr Large 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 Aqr Large Cap, you can compare the effects of market volatilities on Alger Small and Aqr Large 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 Aqr Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Small and Aqr Large.
Diversification Opportunities for Alger Small and Aqr Large
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alger and Aqr is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Alger Small Cap and Aqr Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Large Cap 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 Aqr Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Large Cap has no effect on the direction of Alger Small i.e., Alger Small and Aqr Large go up and down completely randomly.
Pair Corralation between Alger Small and Aqr Large
Assuming the 90 days horizon Alger Small Cap is expected to generate 1.25 times more return on investment than Aqr Large. However, Alger Small is 1.25 times more volatile than Aqr Large Cap. It trades about 0.06 of its potential returns per unit of risk. Aqr Large Cap is currently generating about 0.07 per unit of risk. If you would invest 1,751 in Alger Small Cap on August 26, 2024 and sell it today you would earn a total of 472.00 from holding Alger Small Cap or generate 26.96% 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. Aqr Large Cap
Performance |
| Timeline |
| Alger Small Cap |
| Aqr Large Cap |
Alger Small and Aqr Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Small and Aqr Large
The main advantage of trading using opposite Alger Small and Aqr Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Small position performs unexpectedly, Aqr Large 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 Aqr Large will offset losses from the drop in Aqr Large'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 |
| Aqr Large vs. Western Asset High | Aqr Large vs. Siit High Yield | Aqr Large vs. Needham Aggressive Growth | Aqr Large vs. Victory High Income |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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