Correlation Between Payden Government and Alger Smallcap
Can any of the company-specific risk be diversified away by investing in both Payden Government and Alger Smallcap 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 Payden Government and Alger Smallcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payden Government Fund and Alger Smallcap Growth, you can compare the effects of market volatilities on Payden Government and Alger Smallcap 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 Payden Government with a short position of Alger Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Government and Alger Smallcap.
Diversification Opportunities for Payden Government and Alger Smallcap
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Payden and Alger is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Payden Government Fund and Alger Smallcap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Smallcap Growth and Payden Government 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 Payden Government Fund are associated (or correlated) with Alger Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Smallcap Growth has no effect on the direction of Payden Government i.e., Payden Government and Alger Smallcap go up and down completely randomly.
Pair Corralation between Payden Government and Alger Smallcap
Assuming the 90 days horizon Payden Government is expected to generate 4.87 times less return on investment than Alger Smallcap. But when comparing it to its historical volatility, Payden Government Fund is 6.32 times less risky than Alger Smallcap. It trades about 0.07 of its potential returns per unit of risk. Alger Smallcap Growth is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 822.00 in Alger Smallcap Growth on September 12, 2024 and sell it today you would earn a total of 299.00 from holding Alger Smallcap Growth or generate 36.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Government Fund vs. Alger Smallcap Growth
Performance |
| Timeline |
| Payden Government |
| Alger Smallcap Growth |
Payden Government and Alger Smallcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Government and Alger Smallcap
The main advantage of trading using opposite Payden Government and Alger Smallcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Government position performs unexpectedly, Alger Smallcap 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 Smallcap will offset losses from the drop in Alger Smallcap's long position.| Payden Government vs. SCOR PK | Payden Government vs. Morningstar Unconstrained Allocation | Payden Government vs. Via Renewables | Payden Government vs. Bondbloxx ETF Trust |
| Alger Smallcap vs. Goldman Sachs Government | Alger Smallcap vs. Dws Government Money | Alger Smallcap vs. Payden Government Fund | Alger Smallcap vs. Franklin Adjustable Government |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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