Correlation Between Goldman Sachs and Alger Small

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

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

Diversification Opportunities for Goldman Sachs and Alger Small

-0.85

Correlation Coefficient

Goldman Sachs  Alger Small

Pay attention - limited upside

The 3 months correlation between Goldman and Alger is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Clean and Alger Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Small Cap and Goldman Sachs 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 Goldman Sachs Clean are associated (or correlated) with Alger Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Small Cap has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Alger Small go up and down completely randomly.

Pair Corralation between Goldman Sachs and Alger Small

Assuming the 90 days horizon Goldman Sachs Clean is expected to under-perform the Alger Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Goldman Sachs Clean is 1.68 times less risky than Alger Small. The mutual fund trades about -0.15 of its potential returns per unit of risk. The Alger Small Cap is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,766  in Alger Small Cap on September 12, 2024 and sell it today you would earn a total of  3.00  from holding Alger Small Cap or generate 0.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Goldman Sachs Clean  vs.  Alger Small Cap

Goldman Sachs Clean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Clean has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental drivers remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Alger Small Cap

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Small Cap are ranked lower than 15 (%) 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.

Pair Trading with Goldman Sachs and Alger Small

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

The idea behind Goldman Sachs Clean and Alger Small Cap 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.