Correlation Between Alger Smallcap and Deutsche Global

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

By analyzing existing cross correlation between Alger Smallcap Growth and Deutsche Global Real, you can compare the effects of market volatilities on Alger Smallcap and Deutsche Global 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 Smallcap with a short position of Deutsche Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Smallcap and Deutsche Global.

Diversification Opportunities for Alger Smallcap and Deutsche Global

-0.25

Correlation Coefficient

Alger Smallcap  Deutsche Global

Very good diversification

The 3 months correlation between Alger and Deutsche is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Alger Smallcap Growth and Deutsche Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Global Real and Alger Smallcap 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 Smallcap Growth are associated (or correlated) with Deutsche Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Global Real has no effect on the direction of Alger Smallcap i.e., Alger Smallcap and Deutsche Global go up and down completely randomly.

Pair Corralation between Alger Smallcap and Deutsche Global

Assuming the 90 days horizon Alger Smallcap Growth is expected to generate 1.83 times more return on investment than Deutsche Global. However, Alger Smallcap is 1.83 times more volatile than Deutsche Global Real. It trades about 0.29 of its potential returns per unit of risk. Deutsche Global Real is currently generating about 0.08 per unit of risk. If you would invest  1,027  in Alger Smallcap Growth on September 5, 2024 and sell it today you would earn a total of  105.00  from holding Alger Smallcap Growth or generate 10.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Alger Smallcap Growth  vs.  Deutsche Global Real

Alger Smallcap Growth

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Smallcap Growth are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Alger Smallcap showed solid returns over the last few months and may actually be approaching a breakup point.

Deutsche Global Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deutsche Global Real has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Deutsche Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alger Smallcap and Deutsche Global

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

The idea behind Alger Smallcap Growth and Deutsche Global Real 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.