Correlation Between Needham Aggressive and Alger Small
Can any of the company-specific risk be diversified away by investing in both Needham Aggressive 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 Needham Aggressive and Alger Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Needham Aggressive Growth and Alger Small Cap, you can compare the effects of market volatilities on Needham Aggressive 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 Needham Aggressive with a short position of Alger Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Aggressive and Alger Small.
Diversification Opportunities for Needham Aggressive and Alger Small
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Needham and Alger is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth 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 Needham Aggressive 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 Needham Aggressive Growth 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 Needham Aggressive i.e., Needham Aggressive and Alger Small go up and down completely randomly.
Pair Corralation between Needham Aggressive and Alger Small
Assuming the 90 days horizon Needham Aggressive is expected to generate 1.32 times less return on investment than Alger Small. But when comparing it to its historical volatility, Needham Aggressive Growth is 1.07 times less risky than Alger Small. It trades about 0.31 of its potential returns per unit of risk. Alger Small Cap is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 1,589 in Alger Small Cap on September 3, 2024 and sell it today you would earn a total of 217.00 from holding Alger Small Cap or generate 13.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Needham Aggressive Growth vs. Alger Small Cap
Performance |
| Timeline |
| Needham Aggressive Growth |
| Alger Small Cap |
Needham Aggressive and Alger Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Aggressive and Alger Small
The main advantage of trading using opposite Needham Aggressive and Alger Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Aggressive 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.| Needham Aggressive vs. Needham Aggressive Growth | Needham Aggressive vs. Needham Small Cap | Needham Aggressive vs. Ultramid Cap Profund Ultramid Cap | Needham Aggressive vs. Fidelity Advisor Semiconductors |
| Alger Small vs. Angel Oak Ultrashort | Alger Small vs. Old Westbury Short Term | Alger Small vs. Rbc Short Duration | Alger Small vs. Sterling Capital Short |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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