Correlation Between Alger Smidcap and Dreyfus Technology
Can any of the company-specific risk be diversified away by investing in both Alger Smidcap and Dreyfus Technology 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 Smidcap and Dreyfus Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alger Smidcap Focus and Dreyfus Technology Growth, you can compare the effects of market volatilities on Alger Smidcap and Dreyfus Technology 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 Smidcap with a short position of Dreyfus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Smidcap and Dreyfus Technology.
Diversification Opportunities for Alger Smidcap and Dreyfus Technology
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alger and Dreyfus is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Alger Smidcap Focus and Dreyfus Technology Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Technology Growth and Alger Smidcap 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 Smidcap Focus are associated (or correlated) with Dreyfus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Technology Growth has no effect on the direction of Alger Smidcap i.e., Alger Smidcap and Dreyfus Technology go up and down completely randomly.
Pair Corralation between Alger Smidcap and Dreyfus Technology
Assuming the 90 days horizon Alger Smidcap Focus is expected to under-perform the Dreyfus Technology. But the mutual fund apears to be less risky and, when comparing its historical volatility, Alger Smidcap Focus is 1.01 times less risky than Dreyfus Technology. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Dreyfus Technology Growth is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 8,085 in Dreyfus Technology Growth on October 10, 2024 and sell it today you would lose (253.00) from holding Dreyfus Technology Growth or give up 3.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Smidcap Focus vs. Dreyfus Technology Growth
Performance |
| Timeline |
| Alger Smidcap Focus |
| Dreyfus Technology Growth |
Alger Smidcap and Dreyfus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Smidcap and Dreyfus Technology
The main advantage of trading using opposite Alger Smidcap and Dreyfus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Smidcap position performs unexpectedly, Dreyfus Technology 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 Dreyfus Technology will offset losses from the drop in Dreyfus Technology's long position.| Alger Smidcap vs. Alphacentric Lifesci Healthcare | Alger Smidcap vs. Invesco Global Health | Alger Smidcap vs. Blackrock Health Sciences | Alger Smidcap vs. Vanguard Health Care |
| Dreyfus Technology vs. Putnam Vertible Securities | Dreyfus Technology vs. Absolute Convertible Arbitrage | Dreyfus Technology vs. Lord Abbett Vertible | Dreyfus Technology vs. Gabelli Convertible And |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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