Correlation Between Needham Aggressive and Alger Smidcap
Can any of the company-specific risk be diversified away by investing in both Needham Aggressive 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 Needham Aggressive and Alger Smidcap 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 Smidcap Focus, you can compare the effects of market volatilities on Needham Aggressive 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 Needham Aggressive with a short position of Alger Smidcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Aggressive and Alger Smidcap.
Diversification Opportunities for Needham Aggressive and Alger Smidcap
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Needham and Alger is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth 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 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 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 Needham Aggressive i.e., Needham Aggressive and Alger Smidcap go up and down completely randomly.
Pair Corralation between Needham Aggressive and Alger Smidcap
Assuming the 90 days horizon Needham Aggressive Growth is expected to generate 0.92 times more return on investment than Alger Smidcap. However, Needham Aggressive Growth is 1.09 times less risky than Alger Smidcap. It trades about -0.08 of its potential returns per unit of risk. Alger Smidcap Focus is currently generating about -0.1 per unit of risk. If you would invest 5,151 in Needham Aggressive Growth on October 9, 2024 and sell it today you would lose (117.00) from holding Needham Aggressive Growth or give up 2.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Needham Aggressive Growth vs. Alger Smidcap Focus
Performance |
| Timeline |
| Needham Aggressive Growth |
| Alger Smidcap Focus |
Needham Aggressive and Alger Smidcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Aggressive and Alger Smidcap
The main advantage of trading using opposite Needham Aggressive and Alger Smidcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Aggressive 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.| 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 Smidcap vs. Dreyfus Technology Growth | Alger Smidcap vs. Hennessy Technology Fund | Alger Smidcap vs. Goldman Sachs Technology | Alger Smidcap vs. Towpath Technology |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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