Correlation Between Enservco and Alger Midcap

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

By analyzing existing cross correlation between Enservco Co and Alger Midcap Growth, you can compare the effects of market volatilities on Enservco 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 Enservco with a short position of Alger Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enservco and Alger Midcap.

Diversification Opportunities for Enservco and Alger Midcap

-0.14

Correlation Coefficient

Enservco  Alger Midcap

Good diversification

The 3 months correlation between Enservco and Alger is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Enservco Co 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 Enservco 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 Enservco Co 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 Enservco i.e., Enservco and Alger Midcap go up and down completely randomly.

Pair Corralation between Enservco and Alger Midcap

Given the investment horizon of 90 days Enservco Co is expected to generate 7.48 times more return on investment than Alger Midcap. However, Enservco is 7.48 times more volatile than Alger Midcap Growth. It trades about 0.09 of its potential returns per unit of risk. Alger Midcap Growth is currently generating about 0.08 per unit of risk. If you would invest  21.00  in Enservco Co on February 22, 2024 and sell it today you would earn a total of  6.00  from holding Enservco Co or generate 28.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Enservco Co  vs.  Alger Midcap Growth

Enservco

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Enservco Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Enservco showed solid returns over the last few months and may actually be approaching a breakup point.

Alger Midcap Growth

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Midcap Growth are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Alger Midcap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Enservco and Alger Midcap

The main advantage of trading using opposite Enservco and Alger Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enservco 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.

The idea behind Enservco Co and Alger Midcap Growth 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.