Correlation Between Barloworld and Alger Funds

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

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

Diversification Opportunities for Barloworld and Alger Funds

0.11

Correlation Coefficient

Barloworld  Alger Funds

Average diversification

The 3 months correlation between Barloworld and Alger is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and The Alger Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Funds and Barloworld 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 Barloworld Ltd ADR 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 has no effect on the direction of Barloworld i.e., Barloworld and Alger Funds go up and down completely randomly.

Pair Corralation between Barloworld and Alger Funds

If you would invest  423.00  in Barloworld Ltd ADR on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Barloworld Ltd ADR or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Barloworld Ltd ADR  vs.  The Alger Funds

Barloworld ADR

Risk-Adjusted Performance

0 of 100

Very Weak

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

Alger Funds

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Alger Funds are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Alger Funds may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Barloworld and Alger Funds

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

Check out your portfolio center.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.