Correlation Between Alger Smidcap and Allianzgi Diversified

Can any of the company-specific risk be diversified away by investing in both Alger Smidcap and Allianzgi Diversified 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 Smidcap and Allianzgi Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alger Smidcap Focus and Allianzgi Diversified Income, you can compare the effects of market volatilities on Alger Smidcap and Allianzgi Diversified 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 Smidcap with a short position of Allianzgi Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Smidcap and Allianzgi Diversified.

Diversification Opportunities for Alger Smidcap and Allianzgi Diversified

0.87

Correlation Coefficient

Alger Smidcap  Allianzgi Diversified

Very poor diversification

The 3 months correlation between Alger and Allianzgi is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Alger Smidcap Focus and Allianzgi Diversified Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Diversified and Alger Smidcap 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 Smidcap Focus are associated (or correlated) with Allianzgi Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianzgi Diversified has no effect on the direction of Alger Smidcap i.e., Alger Smidcap and Allianzgi Diversified go up and down completely randomly.

Pair Corralation between Alger Smidcap and Allianzgi Diversified

Assuming the 90 days horizon Alger Smidcap Focus is expected to under-perform the Allianzgi Diversified. In addition to that, Alger Smidcap is 1.39 times more volatile than Allianzgi Diversified Income. It trades about -0.15 of its total potential returns per unit of risk. Allianzgi Diversified Income is currently generating about -0.11 per unit of volatility. If you would invest  2,287  in Allianzgi Diversified Income on December 21, 2024 and sell it today you would lose (164.00) from holding Allianzgi Diversified Income or give up 7.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Alger Smidcap Focus  vs.  Allianzgi Diversified Income

Alger Smidcap Focus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alger Smidcap Focus has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Allianzgi Diversified

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allianzgi Diversified Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Alger Smidcap and Allianzgi Diversified

The main advantage of trading using opposite Alger Smidcap and Allianzgi Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Smidcap position performs unexpectedly, Allianzgi Diversified 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 Allianzgi Diversified will offset losses from the drop in Allianzgi Diversified's long position.

The idea behind Alger Smidcap Focus and Allianzgi Diversified Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.