Correlation Between Balanced Strategy and Alger Smallcap
Can any of the company-specific risk be diversified away by investing in both Balanced Strategy 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 Balanced Strategy and Alger Smallcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Strategy Fund and Alger Smallcap Growth, you can compare the effects of market volatilities on Balanced Strategy 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 Balanced Strategy with a short position of Alger Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Strategy and Alger Smallcap.
Diversification Opportunities for Balanced Strategy and Alger Smallcap
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Balanced and Alger is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Strategy 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 Balanced Strategy 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 Balanced Strategy 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 Balanced Strategy i.e., Balanced Strategy and Alger Smallcap go up and down completely randomly.
Pair Corralation between Balanced Strategy and Alger Smallcap
Assuming the 90 days horizon Balanced Strategy Fund is expected to generate 0.43 times more return on investment than Alger Smallcap. However, Balanced Strategy Fund is 2.32 times less risky than Alger Smallcap. It trades about -0.23 of its potential returns per unit of risk. Alger Smallcap Growth is currently generating about -0.16 per unit of risk. If you would invest 1,052 in Balanced Strategy Fund on October 9, 2024 and sell it today you would lose (28.00) from holding Balanced Strategy Fund or give up 2.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balanced Strategy Fund vs. Alger Smallcap Growth
Performance |
| Timeline |
| Balanced Strategy |
| Alger Smallcap Growth |
Balanced Strategy and Alger Smallcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Strategy and Alger Smallcap
The main advantage of trading using opposite Balanced Strategy and Alger Smallcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Strategy 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.| Balanced Strategy vs. Catalystmillburn Hedge Strategy | Balanced Strategy vs. Black Oak Emerging | Balanced Strategy vs. Western Assets Emerging | Balanced Strategy vs. Nasdaq 100 2x Strategy |
| Alger Smallcap vs. Advent Claymore Convertible | Alger Smallcap vs. Gabelli Convertible And | Alger Smallcap vs. Rationalpier 88 Convertible | Alger Smallcap vs. Fidelity Vertible Securities |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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