Correlation Between Champlain Small and Alger Capital

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Can any of the company-specific risk be diversified away by investing in both Champlain Small and Alger 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 Champlain Small and Alger Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champlain Small and Alger Capital Appreciation, you can compare the effects of market volatilities on Champlain Small and Alger 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 Champlain Small with a short position of Alger Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champlain Small and Alger Capital.

Diversification Opportunities for Champlain Small and Alger Capital

0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Champlain and Alger is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small and Alger Capital Appreciation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Capital Apprec and Champlain 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 Champlain Small are associated (or correlated) with Alger Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Capital Apprec has no effect on the direction of Champlain Small i.e., Champlain Small and Alger Capital go up and down completely randomly.

Pair Corralation between Champlain Small and Alger Capital

Assuming the 90 days horizon Champlain Small is expected to generate 1.64 times less return on investment than Alger Capital. In addition to that, Champlain Small is 1.04 times more volatile than Alger Capital Appreciation. It trades about 0.21 of its total potential returns per unit of risk. Alger Capital Appreciation is currently generating about 0.36 per unit of volatility. If you would invest  3,051  in Alger Capital Appreciation on September 6, 2024 and sell it today you would earn a total of  868.00  from holding Alger Capital Appreciation or generate 28.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Champlain Small  vs.  Alger Capital Appreciation

 Performance 
       Timeline  
Champlain Small 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Champlain Small are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Champlain Small showed solid returns over the last few months and may actually be approaching a breakup point.
Alger Capital Apprec 

Risk-Adjusted Performance

28 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Alger Capital Appreciation are ranked lower than 28 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Alger Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Champlain Small and Alger Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Champlain Small and Alger Capital

The main advantage of trading using opposite Champlain Small and Alger Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champlain Small position performs unexpectedly, Alger 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 Alger Capital will offset losses from the drop in Alger Capital's long position.
The idea behind Champlain Small and Alger Capital Appreciation 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.
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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