Correlation Between Alger Smallcap and Alger Capital
Can any of the company-specific risk be diversified away by investing in both Alger Smallcap and Alger Capital 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 Alger Capital 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 Alger Capital Appreciation, you can compare the effects of market volatilities on Alger Smallcap and Alger Capital 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 Alger Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Smallcap and Alger Capital.
Diversification Opportunities for Alger Smallcap and Alger Capital
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alger and Alger is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Alger Smallcap Growth and Alger Capital Appreciation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Capital Apprec 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 Alger Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Capital Apprec has no effect on the direction of Alger Smallcap i.e., Alger Smallcap and Alger Capital go up and down completely randomly.
Pair Corralation between Alger Smallcap and Alger Capital
Assuming the 90 days horizon Alger Smallcap Growth is expected to under-perform the Alger Capital. But the mutual fund apears to be less risky and, when comparing its historical volatility, Alger Smallcap Growth is 1.29 times less risky than Alger Capital. The mutual fund trades about -0.17 of its potential returns per unit of risk. The Alger Capital Appreciation is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 1,687 in Alger Capital Appreciation on December 28, 2024 and sell it today you would lose (180.00) from holding Alger Capital Appreciation or give up 10.67% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Alger Smallcap Growth vs. Alger Capital Appreciation
Performance |
Timeline |
Alger Smallcap Growth |
Alger Capital Apprec |
Alger Smallcap and Alger Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alger Smallcap and Alger Capital
The main advantage of trading using opposite Alger Smallcap and Alger Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Smallcap position performs unexpectedly, Alger Capital 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 Capital will offset losses from the drop in Alger Capital's long position.Alger Smallcap vs. Alger Midcap Growth | Alger Smallcap vs. Templeton Growth Fund | Alger Smallcap vs. Alger Capital Appreciation | Alger Smallcap vs. Janus Forty Fund |
Alger Capital vs. Alger Midcap Growth | Alger Capital vs. Alger Midcap Growth | Alger Capital vs. Alger Mid Cap | Alger Capital vs. Alger 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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