Correlation Between Alger Capital and Applied Finance

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

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

Diversification Opportunities for Alger Capital and Applied Finance

0.76

Correlation Coefficient

Alger Capital  Applied Finance

Poor diversification

The 3 months correlation between Alger and Applied is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Alger Capital Appreciation and Applied Finance Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Finance Core and Alger Capital 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 Capital Appreciation are associated (or correlated) with Applied Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Finance Core has no effect on the direction of Alger Capital i.e., Alger Capital and Applied Finance go up and down completely randomly.

Pair Corralation between Alger Capital and Applied Finance

Assuming the 90 days horizon Alger Capital Appreciation is expected to generate 1.66 times more return on investment than Applied Finance. However, Alger Capital is 1.66 times more volatile than Applied Finance Core. It trades about 0.24 of its potential returns per unit of risk. Applied Finance Core is currently generating about 0.06 per unit of risk. If you would invest  3,718  in Alger Capital Appreciation on May 21, 2025 and sell it today you would earn a total of  219.00  from holding Alger Capital Appreciation or generate 5.89% return on investment over 90 days.

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

Alger Capital Appreciation  vs.  Applied Finance Core

Alger Capital Apprec

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Capital Appreciation are ranked lower than 24 (%) 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.

Applied Finance Core

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Finance Core are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Applied Finance may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Alger Capital and Applied Finance

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

The idea behind Alger Capital Appreciation and Applied Finance Core 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.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.