Correlation Between Alger Small and Absolute Capital
Can any of the company-specific risk be diversified away by investing in both Alger Small and Absolute 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 Small and Absolute Capital 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 Absolute Capital Asset, you can compare the effects of market volatilities on Alger Small and Absolute 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 Small with a short position of Absolute Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Small and Absolute Capital.
Diversification Opportunities for Alger Small and Absolute Capital
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alger and Absolute is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Alger Small Cap and Absolute Capital Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Capital Asset 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 Absolute Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Capital Asset has no effect on the direction of Alger Small i.e., Alger Small and Absolute Capital go up and down completely randomly.
Pair Corralation between Alger Small and Absolute Capital
Assuming the 90 days horizon Alger Small Cap is expected to under-perform the Absolute Capital. In addition to that, Alger Small is 2.08 times more volatile than Absolute Capital Asset. It trades about -0.21 of its total potential returns per unit of risk. Absolute Capital Asset is currently generating about -0.05 per unit of volatility. If you would invest 1,219 in Absolute Capital Asset on September 25, 2024 and sell it today you would lose (9.00) from holding Absolute Capital Asset or give up 0.74% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 95.24% |
Values | Daily Returns |
Alger Small Cap vs. Absolute Capital Asset
Performance |
Timeline |
Alger Small Cap |
Absolute Capital Asset |
Alger Small and Absolute Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alger Small and Absolute Capital
The main advantage of trading using opposite Alger Small and Absolute Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Small position performs unexpectedly, Absolute 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 Absolute Capital will offset losses from the drop in Absolute Capital's long position.Alger Small vs. Alger Midcap Growth | Alger Small vs. Alger Midcap Growth | Alger Small vs. Alger Mid Cap | Alger Small vs. Alger Small Cap |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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