Correlation Between Alger Midcap and Salient Investment
Can any of the company-specific risk be diversified away by investing in both Alger Midcap and Salient Investment 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 Midcap and Salient Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alger Midcap Growth and Salient Investment Grade, you can compare the effects of market volatilities on Alger Midcap and Salient Investment 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 Midcap with a short position of Salient Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Midcap and Salient Investment.
Diversification Opportunities for Alger Midcap and Salient Investment
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alger and Salient is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Alger Midcap Growth and Salient Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient Investment Grade and Alger Midcap 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 Midcap Growth are associated (or correlated) with Salient Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient Investment Grade has no effect on the direction of Alger Midcap i.e., Alger Midcap and Salient Investment go up and down completely randomly.
Pair Corralation between Alger Midcap and Salient Investment
Assuming the 90 days horizon Alger Midcap is expected to generate 1.96 times less return on investment than Salient Investment. But when comparing it to its historical volatility, Alger Midcap Growth is 1.26 times less risky than Salient Investment. It trades about 0.06 of its potential returns per unit of risk. Salient Investment Grade is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,066 in Salient Investment Grade on December 4, 2024 and sell it today you would earn a total of 206.00 from holding Salient Investment Grade or generate 19.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Midcap Growth vs. Salient Investment Grade
Performance |
| Timeline |
| Alger Midcap Growth |
| Salient Investment Grade |
Alger Midcap and Salient Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Midcap and Salient Investment
The main advantage of trading using opposite Alger Midcap and Salient Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Midcap position performs unexpectedly, Salient Investment 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 Salient Investment will offset losses from the drop in Salient Investment's long position.| Alger Midcap vs. Fidelity Advisor Diversified | Alger Midcap vs. Wilmington Diversified Income | Alger Midcap vs. Western Asset Diversified | Alger Midcap vs. Lord Abbett Diversified |
| Salient Investment vs. Franklin Government Money | Salient Investment vs. Pace Select Advisors | Salient Investment vs. Wilmington Funds | Salient Investment vs. T Rowe Price |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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