Correlation Between Touchstone Small and Alger Smallcap
Can any of the company-specific risk be diversified away by investing in both Touchstone Small 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 Touchstone Small and Alger Smallcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone Small Cap and Alger Smallcap Growth, you can compare the effects of market volatilities on Touchstone Small 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 Touchstone Small with a short position of Alger Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Alger Smallcap.
Diversification Opportunities for Touchstone Small and Alger Smallcap
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Touchstone and Alger is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap 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 Touchstone Small 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 Touchstone Small Cap 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 Touchstone Small i.e., Touchstone Small and Alger Smallcap go up and down completely randomly.
Pair Corralation between Touchstone Small and Alger Smallcap
Assuming the 90 days horizon Touchstone Small is expected to generate 1.01 times less return on investment than Alger Smallcap. But when comparing it to its historical volatility, Touchstone Small Cap is 1.34 times less risky than Alger Smallcap. It trades about 0.2 of its potential returns per unit of risk. Alger Smallcap Growth is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 647.00 in Alger Smallcap Growth on November 3, 2024 and sell it today you would earn a total of 24.00 from holding Alger Smallcap Growth or generate 3.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Small Cap vs. Alger Smallcap Growth
Performance |
| Timeline |
| Touchstone Small Cap |
| Alger Smallcap Growth |
Touchstone Small and Alger Smallcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and Alger Smallcap
The main advantage of trading using opposite Touchstone Small and Alger Smallcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small 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.| Touchstone Small vs. Tiaa Cref Lifecycle Retirement | Touchstone Small vs. Putnman Retirement Ready | Touchstone Small vs. Tiaa Cref Lifestyle Moderate | Touchstone Small vs. Dimensional Retirement Income |
| Alger Smallcap vs. Fidelity Advisor Technology | Alger Smallcap vs. Pgim Jennison Technology | Alger Smallcap vs. Columbia Global Technology | Alger Smallcap vs. Technology Ultrasector Profund |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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