Correlation Between Alger Capital and Barings Emerging

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

By analyzing existing cross correlation between Alger Capital Appreciation and Barings Emerging Markets, you can compare the effects of market volatilities on Alger Capital and Barings Emerging 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 Capital with a short position of Barings Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Capital and Barings Emerging.

Diversification Opportunities for Alger Capital and Barings Emerging

-0.28

Correlation Coefficient

Alger Capital  Barings Emerging

Very good diversification

The 3 months correlation between Alger and Barings is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Alger Capital Appreciation and Barings Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Emerging Markets and Alger Capital 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 Capital Appreciation are associated (or correlated) with Barings Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Emerging Markets has no effect on the direction of Alger Capital i.e., Alger Capital and Barings Emerging go up and down completely randomly.

Pair Corralation between Alger Capital and Barings Emerging

Assuming the 90 days horizon Alger Capital Appreciation is expected to generate 3.81 times more return on investment than Barings Emerging. However, Alger Capital is 3.81 times more volatile than Barings Emerging Markets. It trades about 0.32 of its potential returns per unit of risk. Barings Emerging Markets is currently generating about 0.0 per unit of risk. If you would invest  3,725  in Alger Capital Appreciation on September 9, 2024 and sell it today you would earn a total of  239.00  from holding Alger Capital Appreciation or generate 6.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Alger Capital Appreciation  vs.  Barings Emerging Markets

Alger Capital Apprec

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Capital Appreciation are ranked lower than 27 (%) 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.

Barings Emerging Markets

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Barings Emerging Markets are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Barings Emerging 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 Capital and Barings Emerging

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

The idea behind Alger Capital Appreciation and Barings Emerging Markets 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.