Correlation Between Small Cap and Alger Small
Can any of the company-specific risk be diversified away by investing in both Small Cap 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 Small Cap and Alger Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Stock and Alger Small Cap, you can compare the effects of market volatilities on Small Cap 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 Small Cap with a short position of Alger Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Alger Small.
Diversification Opportunities for Small Cap and Alger Small
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Small and Alger is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock 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 Small Cap 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 Small Cap Stock 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 Small Cap i.e., Small Cap and Alger Small go up and down completely randomly.
Pair Corralation between Small Cap and Alger Small
Assuming the 90 days horizon Small Cap is expected to generate 1.03 times less return on investment than Alger Small. In addition to that, Small Cap is 1.01 times more volatile than Alger Small Cap. It trades about 0.05 of its total potential returns per unit of risk. Alger Small Cap is currently generating about 0.06 per unit of volatility. If you would invest 1,417 in Alger Small Cap on September 12, 2024 and sell it today you would earn a total of 498.00 from holding Alger Small Cap or generate 35.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Stock vs. Alger Small Cap
Performance |
| Timeline |
| Small Cap Stock |
| Alger Small Cap |
Small Cap and Alger Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Alger Small
The main advantage of trading using opposite Small Cap and Alger Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap 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.| Small Cap vs. Shelton Emerging Markets | Small Cap vs. Kinetics Market Opportunities | Small Cap vs. Siit Emerging Markets | Small Cap vs. Investec Emerging Markets |
| Alger Small vs. Small Cap Stock | Alger Small vs. Delaware Limited Term Diversified | Alger Small vs. Tiaa Cref Small Cap Blend | Alger Small vs. Davenport 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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