Correlation Between Red Oak and Alger Capital
Can any of the company-specific risk be diversified away by investing in both Red Oak and Alger Capital 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 Red Oak and Alger Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Oak Technology and Alger Capital Appreciation, you can compare the effects of market volatilities on Red Oak and Alger Capital 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 Red Oak with a short position of Alger Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Oak and Alger Capital.
Diversification Opportunities for Red Oak and Alger Capital
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Red and Alger is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Red Oak Technology and Alger Capital Appreciation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Capital Apprec and Red Oak 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 Red Oak Technology are associated (or correlated) with Alger Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Capital Apprec has no effect on the direction of Red Oak i.e., Red Oak and Alger Capital go up and down completely randomly.
Pair Corralation between Red Oak and Alger Capital
Assuming the 90 days horizon Red Oak is expected to generate 3.15 times less return on investment than Alger Capital. But when comparing it to its historical volatility, Red Oak Technology is 1.15 times less risky than Alger Capital. It trades about 0.08 of its potential returns per unit of risk. Alger Capital Appreciation is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 5,106 in Alger Capital Appreciation on September 13, 2024 and sell it today you would earn a total of 276.00 from holding Alger Capital Appreciation or generate 5.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Red Oak Technology vs. Alger Capital Appreciation
Performance |
| Timeline |
| Red Oak Technology |
| Alger Capital Apprec |
Red Oak and Alger Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Oak and Alger Capital
The main advantage of trading using opposite Red Oak and Alger Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Oak position performs unexpectedly, Alger Capital 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 Capital will offset losses from the drop in Alger Capital's long position.| Red Oak vs. Pin Oak Equity | Red Oak vs. White Oak Select | Red Oak vs. Black Oak Emerging | Red Oak vs. Berkshire Focus |
| Alger Capital vs. Alger Midcap Growth | Alger Capital vs. Alger Midcap Growth | Alger Capital vs. Alger Mid Cap | Alger Capital vs. Alger Small Cap |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |