Correlation Between Ares Capital and ClimateRock
Can any of the company-specific risk be diversified away by investing in both Ares Capital and ClimateRock 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 ClimateRock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares Capital and ClimateRock Class A, you can compare the effects of market volatilities on Ares Capital and ClimateRock 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 ClimateRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Capital and ClimateRock.
Diversification Opportunities for Ares Capital and ClimateRock
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ares and ClimateRock is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ares Capital and ClimateRock Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClimateRock Class 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 ClimateRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClimateRock Class has no effect on the direction of Ares Capital i.e., Ares Capital and ClimateRock go up and down completely randomly.
Pair Corralation between Ares Capital and ClimateRock
Given the investment horizon of 90 days Ares Capital is expected to generate 7.63 times more return on investment than ClimateRock. However, Ares Capital is 7.63 times more volatile than ClimateRock Class A. It trades about 0.44 of its potential returns per unit of risk. ClimateRock Class A is currently generating about 0.27 per unit of risk. If you would invest 2,100 in Ares Capital on September 2, 2024 and sell it today you would earn a total of 115.00 from holding Ares Capital or generate 5.48% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Ares Capital vs. ClimateRock Class A
Performance |
Timeline |
Ares Capital |
ClimateRock Class |
Ares Capital and ClimateRock Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ares Capital and ClimateRock
The main advantage of trading using opposite Ares Capital and ClimateRock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Capital position performs unexpectedly, ClimateRock 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 ClimateRock will offset losses from the drop in ClimateRock's long position.Ares Capital vs. Triplepoint Venture Growth | Ares Capital vs. Sixth Street Specialty | Ares Capital vs. Main Street Capital | Ares Capital vs. Capital Southwest |
ClimateRock vs. AlphaVest Acquisition Corp | ClimateRock vs. Golden Star Acquisition | ClimateRock vs. Alpha One | ClimateRock vs. Manaris 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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