Correlation Between Small Cap and Alger Health
Can any of the company-specific risk be diversified away by investing in both Small Cap and Alger Health 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 Small Cap and Alger Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Equity and Alger Health Sciences, you can compare the effects of market volatilities on Small Cap and Alger Health 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 Small Cap with a short position of Alger Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Alger Health.
Diversification Opportunities for Small Cap and Alger Health
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Small and Alger is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Equity and Alger Health Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Health Sciences and Small Cap 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 Small Cap Equity are associated (or correlated) with Alger Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Health Sciences has no effect on the direction of Small Cap i.e., Small Cap and Alger Health go up and down completely randomly.
Pair Corralation between Small Cap and Alger Health
Assuming the 90 days horizon Small Cap Equity is expected to generate 1.97 times more return on investment than Alger Health. However, Small Cap is 1.97 times more volatile than Alger Health Sciences. It trades about 0.3 of its potential returns per unit of risk. Alger Health Sciences is currently generating about 0.14 per unit of risk. If you would invest 1,839 in Small Cap Equity on September 1, 2024 and sell it today you would earn a total of 192.00 from holding Small Cap Equity or generate 10.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Equity vs. Alger Health Sciences
Performance |
| Timeline |
| Small Cap Equity |
| Alger Health Sciences |
Small Cap and Alger Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Alger Health
The main advantage of trading using opposite Small Cap and Alger Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Alger Health 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 Health will offset losses from the drop in Alger Health's long position.| Small Cap vs. Arrow Managed Futures | Small Cap vs. Volumetric Fund Volumetric | Small Cap vs. T Rowe Price | Small Cap vs. Abr 7525 Volatility |
| Alger Health vs. Small Cap Equity | Alger Health vs. Us Strategic Equity | Alger Health vs. Ultra Short Fixed Income | Alger Health vs. Calamos Global Equity |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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