Correlation Between Alger Global and Alger Smidcap
Can any of the company-specific risk be diversified away by investing in both Alger Global and Alger Smidcap 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 Global and Alger Smidcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alger Global Growth and Alger Smidcap Focus, you can compare the effects of market volatilities on Alger Global and Alger Smidcap 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 Global with a short position of Alger Smidcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Global and Alger Smidcap.
Diversification Opportunities for Alger Global and Alger Smidcap
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alger and Alger is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Alger Global Growth and Alger Smidcap Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Smidcap Focus and Alger Global 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 Global Growth are associated (or correlated) with Alger Smidcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Smidcap Focus has no effect on the direction of Alger Global i.e., Alger Global and Alger Smidcap go up and down completely randomly.
Pair Corralation between Alger Global and Alger Smidcap
Assuming the 90 days horizon Alger Global is expected to generate 3.19 times less return on investment than Alger Smidcap. But when comparing it to its historical volatility, Alger Global Growth is 1.93 times less risky than Alger Smidcap. It trades about 0.16 of its potential returns per unit of risk. Alger Smidcap Focus is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,377 in Alger Smidcap Focus on August 27, 2024 and sell it today you would earn a total of 132.00 from holding Alger Smidcap Focus or generate 9.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Global Growth vs. Alger Smidcap Focus
Performance |
| Timeline |
| Alger Global Growth |
| Alger Smidcap Focus |
Alger Global and Alger Smidcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Global and Alger Smidcap
The main advantage of trading using opposite Alger Global and Alger Smidcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Global position performs unexpectedly, Alger Smidcap 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 Smidcap will offset losses from the drop in Alger Smidcap's long position.| Alger Global vs. Alger Midcap Growth | Alger Global vs. Alger Midcap Growth | Alger Global vs. Alger Mid Cap | Alger Global vs. Alger Small Cap |
| Alger Smidcap vs. Alger Midcap Growth | Alger Smidcap vs. Alger Midcap Growth | Alger Smidcap vs. Alger Mid Cap | Alger Smidcap 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |