Correlation Between Franklin Emerging and Alger Smallcap
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging and Alger Smallcap 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 Franklin Emerging and Alger Smallcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Emerging Market and Alger Smallcap Growth, you can compare the effects of market volatilities on Franklin Emerging and Alger Smallcap 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 Franklin Emerging with a short position of Alger Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and Alger Smallcap.
Diversification Opportunities for Franklin Emerging and Alger Smallcap
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Alger is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market and Alger Smallcap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Smallcap Growth and Franklin Emerging 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 Franklin Emerging Market are associated (or correlated) with Alger Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Smallcap Growth has no effect on the direction of Franklin Emerging i.e., Franklin Emerging and Alger Smallcap go up and down completely randomly.
Pair Corralation between Franklin Emerging and Alger Smallcap
Assuming the 90 days horizon Franklin Emerging is expected to generate 4.3 times less return on investment than Alger Smallcap. But when comparing it to its historical volatility, Franklin Emerging Market is 6.35 times less risky than Alger Smallcap. It trades about 0.1 of its potential returns per unit of risk. Alger Smallcap Growth is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 631.00 in Alger Smallcap Growth on October 24, 2024 and sell it today you would earn a total of 33.00 from holding Alger Smallcap Growth or generate 5.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.33% |
| Values | Daily Returns |
Franklin Emerging Market vs. Alger Smallcap Growth
Performance |
| Timeline |
| Franklin Emerging Market |
| Alger Smallcap Growth |
Franklin Emerging and Alger Smallcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and Alger Smallcap
The main advantage of trading using opposite Franklin Emerging and Alger Smallcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging position performs unexpectedly, Alger Smallcap 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 Smallcap will offset losses from the drop in Alger Smallcap's long position.| Franklin Emerging vs. Alger Health Sciences | Franklin Emerging vs. Highland Longshort Healthcare | Franklin Emerging vs. Alphacentric Lifesci Healthcare | Franklin Emerging vs. Allianzgi Health Sciences |
| Alger Smallcap vs. Qs Large Cap | Alger Smallcap vs. Small Cap Stock | Alger Smallcap vs. Rational Strategic Allocation | Alger Smallcap vs. Nuveen New Jersey |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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