Correlation Between Alger 35 and Alger Small
Can any of the company-specific risk be diversified away by investing in both Alger 35 and Alger Small 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 35 and Alger Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alger 35 Fund and Alger Small Cap, you can compare the effects of market volatilities on Alger 35 and Alger Small 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 35 with a short position of Alger Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger 35 and Alger Small.
Diversification Opportunities for Alger 35 and Alger Small
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alger and Alger is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Alger 35 Fund and Alger Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Small Cap and Alger 35 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 35 Fund are associated (or correlated) with Alger Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Small Cap has no effect on the direction of Alger 35 i.e., Alger 35 and Alger Small go up and down completely randomly.
Pair Corralation between Alger 35 and Alger Small
Assuming the 90 days horizon Alger 35 Fund is expected to generate 0.97 times more return on investment than Alger Small. However, Alger 35 Fund is 1.03 times less risky than Alger Small. It trades about 0.11 of its potential returns per unit of risk. Alger Small Cap is currently generating about 0.05 per unit of risk. If you would invest 1,039 in Alger 35 Fund on August 27, 2024 and sell it today you would earn a total of 716.00 from holding Alger 35 Fund or generate 68.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger 35 Fund vs. Alger Small Cap
Performance |
| Timeline |
| Alger 35 Fund |
| Alger Small Cap |
Alger 35 and Alger Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger 35 and Alger Small
The main advantage of trading using opposite Alger 35 and Alger Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger 35 position performs unexpectedly, Alger Small 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 Small will offset losses from the drop in Alger Small's long position.| Alger 35 vs. Alger Midcap Growth | Alger 35 vs. Alger Midcap Growth | Alger 35 vs. Alger Mid Cap | Alger 35 vs. Alger Small Cap |
| Alger Small vs. Alger Midcap Growth | Alger Small vs. Alger Midcap Growth | Alger Small vs. Alger Mid Cap | Alger Small vs. Alger Global Growth |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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