Correlation Between Artisan Small and Alger Capital

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

By analyzing existing cross correlation between Artisan Small Cap and Alger Capital Appreciation, you can compare the effects of market volatilities on Artisan Small 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 Artisan Small with a short position of Alger Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Artisan Small and Alger Capital.

Diversification Opportunities for Artisan Small and Alger Capital

0.92

Correlation Coefficient

Artisan Small  Alger Capital

Almost no diversification

The 3 months correlation between Artisan and Alger is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Artisan Small Cap 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 Artisan Small 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 Artisan Small Cap 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 Artisan Small i.e., Artisan Small and Alger Capital go up and down completely randomly.

Pair Corralation between Artisan Small and Alger Capital

Assuming the 90 days horizon Artisan Small is expected to generate 2.1 times less return on investment than Alger Capital. In addition to that, Artisan Small is 1.06 times more volatile than Alger Capital Appreciation. It trades about 0.05 of its total potential returns per unit of risk. Alger Capital Appreciation is currently generating about 0.11 per unit of volatility. If you would invest  2,013  in Alger Capital Appreciation on September 6, 2024 and sell it today you would earn a total of  1,906  from holding Alger Capital Appreciation or generate 94.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Artisan Small Cap  vs.  Alger Capital Appreciation

Artisan Small Cap

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Small Cap are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Artisan Small showed solid returns over the last few months and may actually be approaching a breakup point.

Alger Capital Apprec

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Capital Appreciation are ranked lower than 28 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Alger Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Artisan Small and Alger Capital

The main advantage of trading using opposite Artisan Small and Alger Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Artisan Small 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.

The idea behind Artisan Small Cap and Alger Capital Appreciation 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..