Correlation Between Alger Smidcap and Growth Strategy
Can any of the company-specific risk be diversified away by investing in both Alger Smidcap and Growth Strategy 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 Growth Strategy 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 Growth Strategy Fund, you can compare the effects of market volatilities on Alger Smidcap and Growth Strategy 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 Growth Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Smidcap and Growth Strategy.
Diversification Opportunities for Alger Smidcap and Growth Strategy
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Alger and Growth is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Alger Smidcap Focus and Growth Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Strategy 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 Growth Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Strategy has no effect on the direction of Alger Smidcap i.e., Alger Smidcap and Growth Strategy go up and down completely randomly.
Pair Corralation between Alger Smidcap and Growth Strategy
Assuming the 90 days horizon Alger Smidcap is expected to generate 1.74 times less return on investment than Growth Strategy. In addition to that, Alger Smidcap is 2.07 times more volatile than Growth Strategy Fund. It trades about 0.02 of its total potential returns per unit of risk. Growth Strategy Fund is currently generating about 0.08 per unit of volatility. If you would invest 982.00 in Growth Strategy Fund on December 8, 2024 and sell it today you would earn a total of 282.00 from holding Growth Strategy Fund or generate 28.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Smidcap Focus vs. Growth Strategy Fund
Performance |
| Timeline |
| Alger Smidcap Focus |
| Growth Strategy |
Alger Smidcap and Growth Strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Smidcap and Growth Strategy
The main advantage of trading using opposite Alger Smidcap and Growth Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Smidcap position performs unexpectedly, Growth Strategy 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 Growth Strategy will offset losses from the drop in Growth Strategy's long position.| Alger Smidcap vs. Dimensional Retirement Income | ||
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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 CEOs Directory module to screen CEOs from public companies around the world.
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