Correlation Between Alger Midcap and Baron Growth
Can any of the company-specific risk be diversified away by investing in both Alger Midcap and Baron Growth 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 Baron Growth 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 Baron Growth Fund, you can compare the effects of market volatilities on Alger Midcap and Baron Growth 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 Baron Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alger Midcap and Baron Growth.
Diversification Opportunities for Alger Midcap and Baron Growth
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alger and Baron is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Alger Midcap Growth and Baron Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Growth 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 Baron Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Growth has no effect on the direction of Alger Midcap i.e., Alger Midcap and Baron Growth go up and down completely randomly.
Pair Corralation between Alger Midcap and Baron Growth
Assuming the 90 days horizon Alger Midcap Growth is expected to generate 1.13 times more return on investment than Baron Growth. However, Alger Midcap is 1.13 times more volatile than Baron Growth Fund. It trades about -0.1 of its potential returns per unit of risk. Baron Growth Fund is currently generating about -0.27 per unit of risk. If you would invest 1,397 in Alger Midcap Growth on January 17, 2024 and sell it today you would lose (32.00) from holding Alger Midcap Growth or give up 2.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alger Midcap Growth vs. Baron Growth Fund
Performance |
| Timeline |
| Alger Midcap Growth |
| Baron Growth |
Alger Midcap and Baron Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alger Midcap and Baron Growth
The main advantage of trading using opposite Alger Midcap and Baron Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alger Midcap position performs unexpectedly, Baron Growth 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 Baron Growth will offset losses from the drop in Baron Growth's long position.| Alger Midcap vs. Alger Small Cap | Alger Midcap vs. Alger Small Cap | Alger Midcap vs. Alger Small Cap | Alger Midcap vs. Alger Global Growth |
| Baron Growth vs. Baron Asset Fund | Baron Growth vs. Blackrock Mid Cap | Baron Growth vs. Blackrock Mid Cap | Baron Growth vs. Boston Trust Midcap |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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