Correlation Between Alger Small and Fa 529

Can any of the company-specific risk be diversified away by investing in both Alger Small and Fa 529 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 Fa 529 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 Fa 529 Aggressive, you can compare the effects of market volatilities on Alger Small and Fa 529 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 Fa 529. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Small and Fa 529.

Diversification Opportunities for Alger Small and Fa 529

0.73

Correlation Coefficient

Alger Small  Fa 529

Poor diversification

The 3 months correlation between Alger and FFCGX is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Alger Small Cap and Fa 529 Aggressive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fa 529 Aggressive 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 Fa 529. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fa 529 Aggressive has no effect on the direction of Alger Small i.e., Alger Small and Fa 529 go up and down completely randomly.

Pair Corralation between Alger Small and Fa 529

Assuming the 90 days horizon Alger Small Cap is expected to generate 2.74 times more return on investment than Fa 529. However, Alger Small is 2.74 times more volatile than Fa 529 Aggressive. It trades about 0.34 of its potential returns per unit of risk. Fa 529 Aggressive is currently generating about 0.26 per unit of risk. If you would invest  1,589  in Alger Small Cap on September 5, 2024 and sell it today you would earn a total of  206.00  from holding Alger Small Cap or generate 12.96% return on investment over 90 days.

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

Alger Small Cap  vs.  Fa 529 Aggressive

Alger Small Cap

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Small Cap are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Alger Small showed solid returns over the last few months and may actually be approaching a breakup point.

Fa 529 Aggressive

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fa 529 Aggressive are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Fa 529 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Alger Small and Fa 529

The main advantage of trading using opposite Alger Small and Fa 529 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Small position performs unexpectedly, Fa 529 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 Fa 529 will offset losses from the drop in Fa 529's long position.

The idea behind Alger Small Cap and Fa 529 Aggressive 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.