Correlation Between Alger Mid and Litman Gregory
Can any of the company-specific risk be diversified away by investing in both Alger Mid and Litman Gregory 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 Mid and Litman Gregory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alger Mid Cap and Litman Gregory Masters, you can compare the effects of market volatilities on Alger Mid and Litman Gregory 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 Mid with a short position of Litman Gregory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Mid and Litman Gregory.
Diversification Opportunities for Alger Mid and Litman Gregory
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alger and Litman is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Alger Mid Cap and Litman Gregory Masters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litman Gregory Masters and Alger Mid 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 Mid Cap are associated (or correlated) with Litman Gregory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litman Gregory Masters has no effect on the direction of Alger Mid i.e., Alger Mid and Litman Gregory go up and down completely randomly.
Pair Corralation between Alger Mid and Litman Gregory
Assuming the 90 days horizon Alger Mid Cap is expected to under-perform the Litman Gregory. In addition to that, Alger Mid is 1.66 times more volatile than Litman Gregory Masters. It trades about -0.07 of its total potential returns per unit of risk. Litman Gregory Masters is currently generating about 0.11 per unit of volatility. If you would invest 1,729 in Litman Gregory Masters on December 28, 2024 and sell it today you would earn a total of 133.00 from holding Litman Gregory Masters or generate 7.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Alger Mid Cap vs. Litman Gregory Masters
Performance |
Timeline |
Alger Mid Cap |
Litman Gregory Masters |
Alger Mid and Litman Gregory Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alger Mid and Litman Gregory
The main advantage of trading using opposite Alger Mid and Litman Gregory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Mid position performs unexpectedly, Litman Gregory 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 Litman Gregory will offset losses from the drop in Litman Gregory's long position.Alger Mid vs. Alger Midcap Growth | Alger Mid vs. Alger Midcap Growth | Alger Mid vs. Alger Dynamic Opportunities | Alger Mid vs. Alger Dynamic Opportunities |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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