Correlation Between Alger Small and Federated Mdt
Can any of the company-specific risk be diversified away by investing in both Alger Small and Federated Mdt 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 Federated Mdt 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 Federated Mdt Large, you can compare the effects of market volatilities on Alger Small and Federated Mdt 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 Federated Mdt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Small and Federated Mdt.
Diversification Opportunities for Alger Small and Federated Mdt
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alger and FEDERATED is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Alger Small Cap and Federated Mdt Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt Large 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 Federated Mdt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mdt Large has no effect on the direction of Alger Small i.e., Alger Small and Federated Mdt go up and down completely randomly.
Pair Corralation between Alger Small and Federated Mdt
Assuming the 90 days horizon Alger Small is expected to generate 1.17 times less return on investment than Federated Mdt. In addition to that, Alger Small is 2.02 times more volatile than Federated Mdt Large. It trades about 0.06 of its total potential returns per unit of risk. Federated Mdt Large is currently generating about 0.13 per unit of volatility. If you would invest 2,732 in Federated Mdt Large on August 26, 2024 and sell it today you would earn a total of 998.00 from holding Federated Mdt Large or generate 36.53% 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. Federated Mdt Large
Performance |
| Timeline |
| Alger Small Cap |
| Federated Mdt Large |
Alger Small and Federated Mdt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Small and Federated Mdt
The main advantage of trading using opposite Alger Small and Federated Mdt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Small position performs unexpectedly, Federated Mdt 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 Federated Mdt will offset losses from the drop in Federated Mdt'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 |
| Federated Mdt vs. Federated Mdt Large | Federated Mdt vs. Federated Kaufmann Large | Federated Mdt vs. Federated Total Return | Federated Mdt vs. Nationwide Ziegler Nyse |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |