Correlation Between NYSE Composite and Alger Smidcap
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Alger Smidcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Alger Smidcap Focus, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Alger Smidcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Alger Smidcap.
Diversification Opportunities for NYSE Composite and Alger Smidcap
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Alger is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Alger Smidcap go up and down completely randomly.
Pair Corralation between NYSE Composite and Alger Smidcap
Assuming the 90 days trading horizon NYSE Composite is expected to generate 3.17 times less return on investment than Alger Smidcap. But when comparing it to its historical volatility, NYSE Composite is 2.46 times less risky than Alger Smidcap. It trades about 0.24 of its potential returns per unit of risk. Alger Smidcap Focus is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,377 in Alger Smidcap Focus on August 27, 2024 and sell it today you would earn a total of 161.00 from holding Alger Smidcap Focus or generate 11.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
NYSE Composite vs. Alger Smidcap Focus
Performance |
| Timeline |
NYSE Composite and Alger Smidcap Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Alger Smidcap Focus
Pair trading matchups for Alger Smidcap
Pair Trading with NYSE Composite and Alger Smidcap
The main advantage of trading using opposite NYSE Composite and Alger Smidcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Hooker Furniture | NYSE Composite vs. Hudson Pacific Properties | NYSE Composite vs. Canlan Ice Sports | NYSE Composite vs. Boston Properties |
| Alger Smidcap vs. Alger Midcap Growth | Alger Smidcap vs. Alger Midcap Growth | Alger Smidcap vs. Alger Mid Cap | Alger Smidcap vs. Alger Global Growth |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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