Correlation Between Barings Us and Alger Dynamic

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Can any of the company-specific risk be diversified away by investing in both Barings Us and Alger Dynamic 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 Barings Us and Alger Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings High Yield and Alger Dynamic Opportunities, you can compare the effects of market volatilities on Barings Us and Alger Dynamic 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 Barings Us with a short position of Alger Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Us and Alger Dynamic.

Diversification Opportunities for Barings Us and Alger Dynamic

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Barings and Alger is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Barings High Yield and Alger Dynamic Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Dynamic Opport and Barings Us 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 Barings High Yield are associated (or correlated) with Alger Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Dynamic Opport has no effect on the direction of Barings Us i.e., Barings Us and Alger Dynamic go up and down completely randomly.

Pair Corralation between Barings Us and Alger Dynamic

Assuming the 90 days horizon Barings High Yield is expected to under-perform the Alger Dynamic. But the mutual fund apears to be less risky and, when comparing its historical volatility, Barings High Yield is 5.69 times less risky than Alger Dynamic. The mutual fund trades about -0.37 of its potential returns per unit of risk. The Alger Dynamic Opportunities is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,233  in Alger Dynamic Opportunities on October 10, 2024 and sell it today you would lose (10.00) from holding Alger Dynamic Opportunities or give up 0.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Barings High Yield  vs.  Alger Dynamic Opportunities

 Performance 
       Timeline  
Barings High Yield 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Alger Dynamic Opportunities 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 Dynamic may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Barings Us and Alger Dynamic Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Barings Us and Alger Dynamic

The main advantage of trading using opposite Barings Us and Alger Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Us position performs unexpectedly, Alger Dynamic 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 Dynamic will offset losses from the drop in Alger Dynamic's long position.
The idea behind Barings High Yield and Alger Dynamic Opportunities 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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