Correlation Between Alger Small and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Alger Small and Emerging Markets 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 Alger Small and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alger Small Cap and The Emerging Markets, you can compare the effects of market volatilities on Alger Small and Emerging Markets 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 Alger Small with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Small and Emerging Markets.
Diversification Opportunities for Alger Small and Emerging Markets
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Alger and Emerging is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Alger Small Cap and The Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets and Alger 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 Alger Small Cap are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Alger Small i.e., Alger Small and Emerging Markets go up and down completely randomly.
Pair Corralation between Alger Small and Emerging Markets
Assuming the 90 days horizon Alger Small Cap is expected to under-perform the Emerging Markets. In addition to that, Alger Small is 1.44 times more volatile than The Emerging Markets. It trades about -0.26 of its total potential returns per unit of risk. The Emerging Markets is currently generating about -0.05 per unit of volatility. If you would invest 1,888 in The Emerging Markets on December 4, 2024 and sell it today you would lose (62.00) from holding The Emerging Markets or give up 3.28% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Alger Small Cap vs. The Emerging Markets
Performance |
Timeline |
Alger Small Cap |
Emerging Markets |
Alger Small and Emerging Markets Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alger Small and Emerging Markets
The main advantage of trading using opposite Alger Small and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Small position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.Alger Small vs. Us Government Securities | Alger Small vs. Prudential California Muni | Alger Small vs. Franklin Adjustable Government | Alger Small vs. Federated Government Income |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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