Correlation Between Ares Capital and Investor
Can any of the company-specific risk be diversified away by investing in both Ares Capital and Investor 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 Investor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares Capital and Investor AB, you can compare the effects of market volatilities on Ares Capital and Investor 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 Investor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Capital and Investor.
Diversification Opportunities for Ares Capital and Investor
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ares and Investor is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ares Capital and Investor AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investor AB 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 Investor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investor AB has no effect on the direction of Ares Capital i.e., Ares Capital and Investor go up and down completely randomly.
Pair Corralation between Ares Capital and Investor
Given the investment horizon of 90 days Ares Capital is expected to generate 0.45 times more return on investment than Investor. However, Ares Capital is 2.2 times less risky than Investor. It trades about 0.24 of its potential returns per unit of risk. Investor AB is currently generating about 0.02 per unit of risk. If you would invest 1,945 in Ares Capital on November 4, 2024 and sell it today you would earn a total of 422.00 from holding Ares Capital or generate 21.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares Capital vs. Investor AB
Performance |
| Timeline |
| Ares Capital |
| Investor AB |
Ares Capital and Investor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Capital and Investor
The main advantage of trading using opposite Ares Capital and Investor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Capital position performs unexpectedly, Investor 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 Investor will offset losses from the drop in Investor'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 |
| Investor vs. Brookfield Real Assets | Investor vs. T Rowe Price | Investor vs. Ares Capital | Investor vs. BlackRock |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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