Correlation Between Ares Capital and Guggenheim Strategic
Can any of the company-specific risk be diversified away by investing in both Ares Capital and Guggenheim Strategic 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 Guggenheim Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares Capital and Guggenheim Strategic Opportunities, you can compare the effects of market volatilities on Ares Capital and Guggenheim Strategic 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 Guggenheim Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Capital and Guggenheim Strategic.
Diversification Opportunities for Ares Capital and Guggenheim Strategic
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ares and Guggenheim is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ares Capital and Guggenheim Strategic Opportuni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Strategic 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 Guggenheim Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Strategic has no effect on the direction of Ares Capital i.e., Ares Capital and Guggenheim Strategic go up and down completely randomly.
Pair Corralation between Ares Capital and Guggenheim Strategic
Given the investment horizon of 90 days Ares Capital is expected to generate 0.62 times more return on investment than Guggenheim Strategic. However, Ares Capital is 1.61 times less risky than Guggenheim Strategic. It trades about 0.12 of its potential returns per unit of risk. Guggenheim Strategic Opportunities is currently generating about 0.05 per unit of risk. If you would invest 1,579 in Ares Capital on August 31, 2024 and sell it today you would earn a total of 622.00 from holding Ares Capital or generate 39.39% 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. Guggenheim Strategic Opportuni
Performance |
| Timeline |
| Ares Capital |
| Guggenheim Strategic |
Ares Capital and Guggenheim Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Capital and Guggenheim Strategic
The main advantage of trading using opposite Ares Capital and Guggenheim Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Capital position performs unexpectedly, Guggenheim Strategic 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 Guggenheim Strategic will offset losses from the drop in Guggenheim Strategic'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 |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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