Correlation Between Alger Ai and Auer Growth

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

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

Diversification Opportunities for Alger Ai and Auer Growth

0.85

Correlation Coefficient

Alger Ai  Auer Growth

Very poor diversification

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

Pair Corralation between Alger Ai and Auer Growth

Assuming the 90 days horizon Alger Ai Enablers is expected to under-perform the Auer Growth. In addition to that, Alger Ai is 2.11 times more volatile than Auer Growth Fund. It trades about -0.04 of its total potential returns per unit of risk. Auer Growth Fund is currently generating about -0.02 per unit of volatility. If you would invest  1,329  in Auer Growth Fund on December 27, 2024 and sell it today you would lose (24.00) from holding Auer Growth Fund or give up 1.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

Alger Ai Enablers  vs.  Auer Growth Fund

Alger Ai Enablers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alger Ai Enablers has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Alger Ai is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Auer Growth Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Auer Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Auer Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alger Ai and Auer Growth

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

The idea behind Alger Ai Enablers and Auer Growth Fund 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..