Correlation Between Templeton Growth and Alger Small
Can any of the company-specific risk be diversified away by investing in both Templeton Growth 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 Templeton Growth and Alger Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton Growth Fund and Alger Small Cap, you can compare the effects of market volatilities on Templeton Growth 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 Templeton Growth with a short position of Alger Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Growth and Alger Small.
Diversification Opportunities for Templeton Growth and Alger Small
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Templeton and Alger is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Growth 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 Templeton Growth 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 Templeton Growth 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 Templeton Growth i.e., Templeton Growth and Alger Small go up and down completely randomly.
Pair Corralation between Templeton Growth and Alger Small
Assuming the 90 days horizon Templeton Growth Fund is expected to generate 0.58 times more return on investment than Alger Small. However, Templeton Growth Fund is 1.73 times less risky than Alger Small. It trades about 0.23 of its potential returns per unit of risk. Alger Small Cap is currently generating about 0.05 per unit of risk. If you would invest 2,567 in Templeton Growth Fund on October 20, 2024 and sell it today you would earn a total of 80.00 from holding Templeton Growth Fund or generate 3.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Growth Fund vs. Alger Small Cap
Performance |
| Timeline |
| Templeton Growth |
| Alger Small Cap |
Templeton Growth and Alger Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Growth and Alger Small
The main advantage of trading using opposite Templeton Growth and Alger Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Growth 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.| Templeton Growth vs. Us Vector Equity | Templeton Growth vs. Locorr Dynamic Equity | Templeton Growth vs. Dreyfusstandish Global Fixed | Templeton Growth vs. Artisan Select Equity |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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