Correlation Between Alger Mid and Clarion Partners

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

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

Diversification Opportunities for Alger Mid and Clarion Partners

0.88

Correlation Coefficient

Alger Mid  Clarion Partners

Very poor diversification

The 3 months correlation between Alger and Clarion is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Alger Mid Cap and Clarion Partners Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarion Partners Real and Alger Mid 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 Mid Cap are associated (or correlated) with Clarion Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarion Partners Real has no effect on the direction of Alger Mid i.e., Alger Mid and Clarion Partners go up and down completely randomly.

Pair Corralation between Alger Mid and Clarion Partners

Assuming the 90 days horizon Alger Mid Cap is expected to generate 27.89 times more return on investment than Clarion Partners. However, Alger Mid is 27.89 times more volatile than Clarion Partners Real. It trades about 0.18 of its potential returns per unit of risk. Clarion Partners Real is currently generating about 0.19 per unit of risk. If you would invest  1,597  in Alger Mid Cap on September 27, 2024 and sell it today you would earn a total of  253.00  from holding Alger Mid Cap or generate 15.84% return on investment over 90 days.

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

Alger Mid Cap  vs.  Clarion Partners Real

Alger Mid Cap

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Mid Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Alger Mid showed solid returns over the last few months and may actually be approaching a breakup point.

Clarion Partners Real

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clarion Partners Real are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Clarion Partners 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 Mid and Clarion Partners

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

The idea behind Alger Mid Cap and Clarion Partners Real 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.