Correlation Between Ares Capital and Bridge Investment
Can any of the company-specific risk be diversified away by investing in both Ares Capital and Bridge 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 Ares Capital and Bridge Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares Capital and Bridge Investment Group, you can compare the effects of market volatilities on Ares Capital and Bridge 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 Ares Capital with a short position of Bridge Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Capital and Bridge Investment.
Diversification Opportunities for Ares Capital and Bridge Investment
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ares and Bridge is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ares Capital and Bridge Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridge Investment and Ares 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 Ares Capital are associated (or correlated) with Bridge Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridge Investment has no effect on the direction of Ares Capital i.e., Ares Capital and Bridge Investment go up and down completely randomly.
Pair Corralation between Ares Capital and Bridge Investment
Given the investment horizon of 90 days Ares Capital is expected to generate 0.36 times more return on investment than Bridge Investment. However, Ares Capital is 2.79 times less risky than Bridge Investment. It trades about 0.08 of its potential returns per unit of risk. Bridge Investment Group is currently generating about 0.0 per unit of risk. If you would invest 1,572 in Ares Capital on August 30, 2024 and sell it today you would earn a total of 629.00 from holding Ares Capital or generate 40.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Ares Capital vs. Bridge Investment Group
Performance |
| Timeline |
| Ares Capital |
| Bridge Investment |
Ares Capital and Bridge Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Capital and Bridge Investment
The main advantage of trading using opposite Ares Capital and Bridge Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Capital position performs unexpectedly, Bridge 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 Bridge Investment will offset losses from the drop in Bridge Investment's long position.The idea behind Ares Capital and Bridge Investment Group 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.| Bridge Investment vs. TPG Inc | Bridge Investment vs. Carlyle Secured Lending | Bridge Investment vs. Brookfield Corp |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |