Correlation Between Smallcap Growth and Alger Midcap
Can any of the company-specific risk be diversified away by investing in both Smallcap Growth and Alger Midcap 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 Smallcap Growth and Alger Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Growth Fund and Alger Midcap Growth, you can compare the effects of market volatilities on Smallcap Growth and Alger Midcap 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 Smallcap Growth with a short position of Alger Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Growth and Alger Midcap.
Diversification Opportunities for Smallcap Growth and Alger Midcap
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Smallcap and Alger is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth Fund and Alger Midcap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Midcap Growth and Smallcap Growth 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 Smallcap Growth Fund are associated (or correlated) with Alger Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Midcap Growth has no effect on the direction of Smallcap Growth i.e., Smallcap Growth and Alger Midcap go up and down completely randomly.
Pair Corralation between Smallcap Growth and Alger Midcap
Assuming the 90 days horizon Smallcap Growth Fund is expected to generate 0.82 times more return on investment than Alger Midcap. However, Smallcap Growth Fund is 1.21 times less risky than Alger Midcap. It trades about 0.18 of its potential returns per unit of risk. Alger Midcap Growth is currently generating about 0.06 per unit of risk. If you would invest 1,496 in Smallcap Growth Fund on October 23, 2024 and sell it today you would earn a total of 46.00 from holding Smallcap Growth Fund or generate 3.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Smallcap Growth Fund vs. Alger Midcap Growth
Performance |
Timeline |
Smallcap Growth |
Alger Midcap Growth |
Smallcap Growth and Alger Midcap Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Smallcap Growth and Alger Midcap
The main advantage of trading using opposite Smallcap Growth and Alger Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Growth position performs unexpectedly, Alger Midcap 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 Midcap will offset losses from the drop in Alger Midcap's long position.Smallcap Growth vs. Alpsalerian Energy Infrastructure | Smallcap Growth vs. Fidelity Advisor Energy | Smallcap Growth vs. Thrivent Natural Resources | Smallcap Growth vs. Blackrock All Cap Energy |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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