Correlation Between Oil Gas and Alger Capital
Can any of the company-specific risk be diversified away by investing in both Oil Gas and Alger Capital 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 Oil Gas and Alger Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oil Gas Ultrasector and Alger Capital Appreciation, you can compare the effects of market volatilities on Oil Gas and Alger Capital 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 Oil Gas with a short position of Alger Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Gas and Alger Capital.
Diversification Opportunities for Oil Gas and Alger Capital
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Oil and Alger is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Oil Gas Ultrasector and Alger Capital Appreciation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Capital Apprec and Oil Gas 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 Oil Gas Ultrasector are associated (or correlated) with Alger Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Capital Apprec has no effect on the direction of Oil Gas i.e., Oil Gas and Alger Capital go up and down completely randomly.
Pair Corralation between Oil Gas and Alger Capital
Assuming the 90 days horizon Oil Gas is expected to generate 1.74 times less return on investment than Alger Capital. In addition to that, Oil Gas is 1.53 times more volatile than Alger Capital Appreciation. It trades about 0.1 of its total potential returns per unit of risk. Alger Capital Appreciation is currently generating about 0.26 per unit of volatility. If you would invest 3,133 in Alger Capital Appreciation on September 2, 2024 and sell it today you would earn a total of 644.00 from holding Alger Capital Appreciation or generate 20.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oil Gas Ultrasector vs. Alger Capital Appreciation
Performance |
| Timeline |
| Oil Gas Ultrasector |
| Alger Capital Apprec |
Oil Gas and Alger Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oil Gas and Alger Capital
The main advantage of trading using opposite Oil Gas and Alger Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil Gas position performs unexpectedly, Alger Capital 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 Capital will offset losses from the drop in Alger Capital's long position.| Oil Gas vs. Precious Metals Ultrasector | Oil Gas vs. Real Estate Ultrasector | Oil Gas vs. Basic Materials Ultrasector | Oil Gas vs. Utilities Ultrasector Profund |
| Alger Capital vs. Alger Midcap Growth | Alger Capital vs. Alger Midcap Growth | Alger Capital vs. Alger Mid Cap | Alger Capital 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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