Correlation Between Payden Government and Alger Small
Can any of the company-specific risk be diversified away by investing in both Payden Government 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 Payden Government and Alger Small 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 Small Cap, you can compare the effects of market volatilities on Payden Government 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 Payden Government with a short position of Alger Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Government and Alger Small.
Diversification Opportunities for Payden Government and Alger Small
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Payden and Alger is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Payden Government Fund 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 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 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 Payden Government i.e., Payden Government and Alger Small go up and down completely randomly.
Pair Corralation between Payden Government and Alger Small
Assuming the 90 days horizon Payden Government is expected to generate 5.65 times less return on investment than Alger Small. But when comparing it to its historical volatility, Payden Government Fund is 8.83 times less risky than Alger Small. It trades about 0.09 of its potential returns per unit of risk. Alger Small Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,707 in Alger Small Cap on September 14, 2024 and sell it today you would earn a total of 347.00 from holding Alger Small Cap or generate 20.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Government Fund vs. Alger Small Cap
Performance |
| Timeline |
| Payden Government |
| Alger Small Cap |
Payden Government and Alger Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Government and Alger Small
The main advantage of trading using opposite Payden Government and Alger Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Government 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.| Payden Government vs. Vy Clarion Real | Payden Government vs. Amg Managers Centersquare | Payden Government vs. Short Real Estate | Payden Government vs. Virtus Real Estate |
| Alger Small vs. Neuberger Berman Income | Alger Small vs. Buffalo High Yield | Alger Small vs. Jpmorgan High Yield | Alger Small vs. Artisan High Income |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |