Correlation Between Barloworld and Alger Capital
Can any of the company-specific risk be diversified away by investing in both Barloworld and Alger Capital 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 Capital 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 Alger Capital Appreciation, you can compare the effects of market volatilities on Barloworld and Alger Capital 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 Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Alger Capital.
Diversification Opportunities for Barloworld and Alger Capital
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barloworld and Alger is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Alger Capital Appreciation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Capital Apprec 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 Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Capital Apprec has no effect on the direction of Barloworld i.e., Barloworld and Alger Capital go up and down completely randomly.
Pair Corralation between Barloworld and Alger Capital
Assuming the 90 days horizon Barloworld Ltd ADR is expected to under-perform the Alger Capital. In addition to that, Barloworld is 2.44 times more volatile than Alger Capital Appreciation. It trades about -0.01 of its total potential returns per unit of risk. Alger Capital Appreciation is currently generating about 0.13 per unit of volatility. If you would invest 6,435 in Alger Capital Appreciation on September 1, 2024 and sell it today you would earn a total of 1,572 from holding Alger Capital Appreciation or generate 24.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.64% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Alger Capital Appreciation
Performance |
| Timeline |
| Barloworld ADR |
| Alger Capital Apprec |
Barloworld and Alger Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Alger Capital
The main advantage of trading using opposite Barloworld and Alger Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Alger Capital 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 Capital will offset losses from the drop in Alger Capital's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Alger Capital vs. Alger Midcap Growth | Alger Capital vs. Alger Midcap Growth | Alger Capital vs. Alger Mid Cap | Alger Capital vs. Alger Small Cap |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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