Correlation Between Georgia Tax-free and Alger Concentrated

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

By analyzing existing cross correlation between Georgia Tax Free Bond and Alger Concentrated Equity, you can compare the effects of market volatilities on Georgia Tax-free and Alger Concentrated 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 Georgia Tax-free with a short position of Alger Concentrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Georgia Tax-free and Alger Concentrated.

Diversification Opportunities for Georgia Tax-free and Alger Concentrated

-0.2

Correlation Coefficient

Georgia Tax-free  Alger Concentrated

Good diversification

The 3 months correlation between Georgia and Alger is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Georgia Tax Free Bond and Alger Concentrated Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Concentrated Equity and Georgia Tax-free 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 Georgia Tax Free Bond are associated (or correlated) with Alger Concentrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Concentrated Equity has no effect on the direction of Georgia Tax-free i.e., Georgia Tax-free and Alger Concentrated go up and down completely randomly.

Pair Corralation between Georgia Tax-free and Alger Concentrated

Assuming the 90 days horizon Georgia Tax Free Bond is expected to generate 0.12 times more return on investment than Alger Concentrated. However, Georgia Tax Free Bond is 8.55 times less risky than Alger Concentrated. It trades about 0.03 of its potential returns per unit of risk. Alger Concentrated Equity is currently generating about -0.09 per unit of risk. If you would invest  1,075  in Georgia Tax Free Bond on December 20, 2024 and sell it today you would earn a total of  4.00  from holding Georgia Tax Free Bond or generate 0.37% return on investment over 90 days.

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

Georgia Tax Free Bond  vs.  Alger Concentrated Equity

Georgia Tax Free

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Georgia Tax Free Bond are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Georgia Tax-free is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alger Concentrated Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alger Concentrated Equity 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.

Pair Trading with Georgia Tax-free and Alger Concentrated

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

The idea behind Georgia Tax Free Bond and Alger Concentrated Equity 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.