Correlation Between Biotechnology Fund and Alger Smidcap
Can any of the company-specific risk be diversified away by investing in both Biotechnology Fund 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 Biotechnology Fund and Alger Smidcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biotechnology Fund Class and Alger Smidcap Focus, you can compare the effects of market volatilities on Biotechnology Fund 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 Biotechnology Fund with a short position of Alger Smidcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biotechnology Fund and Alger Smidcap.
Diversification Opportunities for Biotechnology Fund and Alger Smidcap
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BIOTECHNOLOGY and Alger is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Biotechnology Fund Class 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 Biotechnology Fund 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 Biotechnology Fund Class 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 Biotechnology Fund i.e., Biotechnology Fund and Alger Smidcap go up and down completely randomly.
Pair Corralation between Biotechnology Fund and Alger Smidcap
Assuming the 90 days horizon Biotechnology Fund is expected to generate 3.16 times less return on investment than Alger Smidcap. But when comparing it to its historical volatility, Biotechnology Fund Class is 1.24 times less risky than Alger Smidcap. It trades about 0.02 of its potential returns per unit of risk. Alger Smidcap Focus is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,180 in Alger Smidcap Focus on September 2, 2024 and sell it today you would earn a total of 354.00 from holding Alger Smidcap Focus or generate 30.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biotechnology Fund Class vs. Alger Smidcap Focus
Performance |
| Timeline |
| Biotechnology Fund Class |
| Alger Smidcap Focus |
Biotechnology Fund and Alger Smidcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biotechnology Fund and Alger Smidcap
The main advantage of trading using opposite Biotechnology Fund and Alger Smidcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biotechnology Fund 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.| Biotechnology Fund vs. Chase Growth Fund | Biotechnology Fund vs. Nationwide Growth Fund | Biotechnology Fund vs. Eip Growth And | Biotechnology Fund vs. Artisan Small Cap |
| Alger Smidcap vs. Alger Midcap Growth | Alger Smidcap vs. Alger Midcap Growth | Alger Smidcap vs. Alger Mid Cap | Alger Smidcap vs. Alger Dynamic Opportunities |
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 CEOs Directory module to screen CEOs from public companies around the world.
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