Correlation Between Alger Global and Small Cap
Can any of the company-specific risk be diversified away by investing in both Alger Global and Small Cap 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 Small Cap 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 Small Cap Equity, you can compare the effects of market volatilities on Alger Global and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Global and Small Cap.
Diversification Opportunities for Alger Global and Small Cap
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ALGER and Small is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Alger Global Growth and Small Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Equity 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Equity has no effect on the direction of Alger Global i.e., Alger Global and Small Cap go up and down completely randomly.
Pair Corralation between Alger Global and Small Cap
Assuming the 90 days horizon Alger Global Growth is expected to generate 0.81 times more return on investment than Small Cap. However, Alger Global Growth is 1.23 times less risky than Small Cap. It trades about 0.09 of its potential returns per unit of risk. Small Cap Equity is currently generating about 0.06 per unit of risk. If you would invest 2,276 in Alger Global Growth on September 2, 2024 and sell it today you would earn a total of 749.00 from holding Alger Global Growth or generate 32.91% 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. Small Cap Equity
Performance |
| Timeline |
| Alger Global Growth |
| Small Cap Equity |
Alger Global and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Global and Small Cap
The main advantage of trading using opposite Alger Global and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Global position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Alger Global vs. Target Retirement 2040 | Alger Global vs. Franklin Lifesmart Retirement | Alger Global vs. Tiaa Cref Lifestyle Moderate | Alger Global vs. Jp Morgan Smartretirement |
| Small Cap vs. Growth Allocation Fund | Small Cap vs. Defensive Market Strategies | Small Cap vs. Defensive Market Strategies | Small Cap vs. Value Equity Institutional |
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.
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