Correlation Between Arrow Managed and Alger Small
Can any of the company-specific risk be diversified away by investing in both Arrow Managed 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 Arrow Managed and Alger Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Managed Futures and Alger Small Cap, you can compare the effects of market volatilities on Arrow Managed 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 Arrow Managed with a short position of Alger Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Managed and Alger Small.
Diversification Opportunities for Arrow Managed and Alger Small
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arrow and Alger is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Managed Futures 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 Arrow Managed 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 Arrow Managed Futures 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 Arrow Managed i.e., Arrow Managed and Alger Small go up and down completely randomly.
Pair Corralation between Arrow Managed and Alger Small
Assuming the 90 days horizon Arrow Managed is expected to generate 33.57 times less return on investment than Alger Small. But when comparing it to its historical volatility, Arrow Managed Futures is 1.16 times less risky than Alger Small. It trades about 0.01 of its potential returns per unit of risk. Alger Small Cap is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,714 in Alger Small Cap on September 2, 2024 and sell it today you would earn a total of 384.00 from holding Alger Small Cap or generate 22.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow Managed Futures vs. Alger Small Cap
Performance |
| Timeline |
| Arrow Managed Futures |
| Alger Small Cap |
Arrow Managed and Alger Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Managed and Alger Small
The main advantage of trading using opposite Arrow Managed and Alger Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Managed 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.| Arrow Managed vs. Fidelity Advisor Technology | Arrow Managed vs. Biotechnology Ultrasector Profund | Arrow Managed vs. Biotechnology Fund Class |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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