Correlation Between Alger Spectra and Small Pany

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

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

Diversification Opportunities for Alger Spectra and Small Pany

0.81

Correlation Coefficient

Alger Spectra  Small Pany

Very poor diversification

The 3 months correlation between Alger and Small is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Alger Spectra Fund and Small Pany Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Pany Growth and Alger Spectra 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 Spectra Fund are associated (or correlated) with Small Pany. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Pany Growth has no effect on the direction of Alger Spectra i.e., Alger Spectra and Small Pany go up and down completely randomly.

Pair Corralation between Alger Spectra and Small Pany

Assuming the 90 days horizon Alger Spectra Fund is expected to under-perform the Small Pany. But the mutual fund apears to be less risky and, when comparing its historical volatility, Alger Spectra Fund is 1.07 times less risky than Small Pany. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Small Pany Growth is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,599  in Small Pany Growth on December 28, 2024 and sell it today you would lose (118.00) from holding Small Pany Growth or give up 7.38% of portfolio value over 90 days.

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

Alger Spectra Fund  vs.  Small Pany Growth

Alger Spectra

Risk-Adjusted Performance

Very Weak

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

Small Pany Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Small Pany Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental 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 Spectra and Small Pany

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

The idea behind Alger Spectra Fund and Small Pany Growth 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.