Correlation Between Goldman Sachs and Alger Smidcap
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs 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 Goldman Sachs and Alger Smidcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Technology and Alger Smidcap Focus, you can compare the effects of market volatilities on Goldman Sachs 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 Goldman Sachs with a short position of Alger Smidcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Alger Smidcap.
Diversification Opportunities for Goldman Sachs and Alger Smidcap
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Goldman and Alger is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Technology 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 Goldman Sachs 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 Goldman Sachs Technology 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 Goldman Sachs i.e., Goldman Sachs and Alger Smidcap go up and down completely randomly.
Pair Corralation between Goldman Sachs and Alger Smidcap
Assuming the 90 days horizon Goldman Sachs is expected to generate 1.61 times less return on investment than Alger Smidcap. But when comparing it to its historical volatility, Goldman Sachs Technology is 1.08 times less risky than Alger Smidcap. It trades about 0.14 of its potential returns per unit of risk. Alger Smidcap Focus is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,448 in Alger Smidcap Focus on October 24, 2024 and sell it today you would earn a total of 76.00 from holding Alger Smidcap Focus or generate 5.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Technology vs. Alger Smidcap Focus
Performance |
| Timeline |
| Goldman Sachs Technology |
| Alger Smidcap Focus |
Goldman Sachs and Alger Smidcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Alger Smidcap
The main advantage of trading using opposite Goldman Sachs and Alger Smidcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs 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.| Goldman Sachs vs. Qs Small Capitalization | Goldman Sachs vs. Rational Dividend Capture | Goldman Sachs vs. Small Midcap Dividend Income | Goldman Sachs vs. Shelton E Value |
| Alger Smidcap vs. Tax Free Conservative Income | Alger Smidcap vs. Delaware Limited Term Diversified | Alger Smidcap vs. T Rowe Price | Alger Smidcap vs. Allianzgi Diversified Income |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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