Correlation Between Salient Investment and Alger Funds

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

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

Diversification Opportunities for Salient Investment and Alger Funds

0.99

Correlation Coefficient

Salient Investment  Alger Funds

No risk reduction

The 3 months correlation between Salient and Alger is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Salient Investment Grade and Alger Funds Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Funds Mid and Salient Investment 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 Salient Investment Grade are associated (or correlated) with Alger Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Funds Mid has no effect on the direction of Salient Investment i.e., Salient Investment and Alger Funds go up and down completely randomly.

Pair Corralation between Salient Investment and Alger Funds

Assuming the 90 days horizon Salient Investment Grade is expected to generate 1.11 times more return on investment than Alger Funds. However, Salient Investment is 1.11 times more volatile than Alger Funds Mid. It trades about -0.07 of its potential returns per unit of risk. Alger Funds Mid is currently generating about -0.09 per unit of risk. If you would invest  1,314  in Salient Investment Grade on December 29, 2024 and sell it today you would lose (143.00) from holding Salient Investment Grade or give up 10.88% of portfolio value over 90 days.

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

Salient Investment Grade  vs.  Alger Funds Mid

Salient Investment Grade

Risk-Adjusted Performance

Very Weak

Over the last 90 days Salient Investment Grade has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Alger Funds Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alger Funds Mid has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Salient Investment and Alger Funds

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

The idea behind Salient Investment Grade and Alger Funds Mid 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.