Correlation Between Alger Small and Black Oak

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

Diversification Opportunities for Alger Small and Black Oak

0.68

Correlation Coefficient

Alger Small  Black Oak

Poor diversification

The 3 months correlation between Alger and Black is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Alger Small Cap and Black Oak Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Oak Emerging 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 Black Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Oak Emerging has no effect on the direction of Alger Small i.e., Alger Small and Black Oak go up and down completely randomly.

Pair Corralation between Alger Small and Black Oak

Assuming the 90 days horizon Alger Small is expected to generate 1.0 times less return on investment than Black Oak. In addition to that, Alger Small is 1.31 times more volatile than Black Oak Emerging. It trades about 0.16 of its total potential returns per unit of risk. Black Oak Emerging is currently generating about 0.2 per unit of volatility. If you would invest  704.00  in Black Oak Emerging on May 5, 2025 and sell it today you would earn a total of  93.00  from holding Black Oak Emerging or generate 13.21% 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.  Black Oak Emerging

Alger Small Cap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Small Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Alger Small showed solid returns over the last few months and may actually be approaching a breakup point.

Black Oak Emerging

Risk-Adjusted Performance

Solid

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

Pair Trading with Alger Small and Black Oak

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

The idea behind Alger Small Cap and Black Oak Emerging 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.