Correlation Between Dow Jones and Alger Small
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Alger Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Alger Small Cap, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Alger Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Alger Small.
Diversification Opportunities for Dow Jones and Alger Small
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Alger is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial 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 Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and Alger Small go up and down completely randomly.
Pair Corralation between Dow Jones and Alger Small
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.25 times less return on investment than Alger Small. But when comparing it to its historical volatility, Dow Jones Industrial is 2.0 times less risky than Alger Small. It trades about 0.16 of its potential returns per unit of risk. Alger Small Cap is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,872 in Alger Small Cap on September 1, 2024 and sell it today you would earn a total of 370.00 from holding Alger Small Cap or generate 19.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Alger Small Cap
Performance |
| Timeline |
Dow Jones and Alger Small Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Alger Small Cap
Pair trading matchups for Alger Small
Pair Trading with Dow Jones and Alger Small
The main advantage of trading using opposite Dow Jones and Alger Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Alger Small vs. Alger Midcap Growth | Alger Small vs. Alger Midcap Growth | Alger Small vs. Alger Mid Cap | Alger Small vs. Alger Small Cap |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |